Coming on the heels of a 3.9% rate increase in March of 2011, Farmers Insurance plans to increase homeowners insurance rates another 10% in the Lone Star State.
This latest rate increase will affect roughly 350,000 insured in the state of Texas, and will take effect March 16, per the Dallas Morning News. Ouch!
Why Farmers, Why?
The current economy is a strain on everyone these days. Not only consumers, but insurers as well.
Also, they have to pay for those snazzy University of Farmers commercials you see on television and hear on the radio. Those aren’t cheap you know…what with all those A-list actors involved.
The exact details for the increase are not made available to the general public, but Jim Swope, the Vice President and Executive Director for Farmers in North Texas, stated that the higher rates are needed to address more expensive insurance claims in Texas.
Feel better? Nah, we didn’t think so.
Are You at Risk of an Increase?
There are two “types” of homeowner’s policies that will bear the brunt of this increase.
You will want to carefully review your home insurance renewal if you have purchased a “Texas Family Home” or “Next Generation” policy from Farmers Insurance.
Not sure which you have? Call your Farmers agent and ask. They will be able to tell you which you have. After all, they went to Farmers University (not to be confused with a real university).
In short, it looks like the Next Generation policy may not have been priced correctly when it was debuted last year. A 10% increase may mean one of two things:
1. Farmers made a mistake and underpriced the product when they compared it to their competition’s policies – OR –
2. Farmers underpriced it on purpose in order to gain market share and take advantage of those who simply don’t review and shop their insurance costs each year (which is a large portion of the public).
That said, Farmers is not alone here. Insurance companies adjust their rates all the time.
Almost every insurer makes at least one adjustment each year, and just like the cost of gas and bread…insurance prices have risen over the decades.
What Can You Do If You Are Affected?
There are really only a couple of options available to you when your insurance company increases your rate this much. Some options are good, and others not so much.
Here are some ideas if you think a 10% rate increase is just too much to take on:
Independent agents are less likely to feed you a line about the cost of someone else’s claim. They will simply shop your insurance premium and coverage with multiple insurance companies and let the best one win.
2. Contact you current Farmers agent and ask if there is any way to bring the premium down WITHOUT increasing your insurance deductible or reducing your coverage.
We’re talking discounts here…not reducing coverage and increasing your risk to save a buck or two.
Read more: Top homeowners insurance companies in Texas.