Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 2, 2021

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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 Insurance, why?

The current economy is a strain on everyone these days. Not only customers, 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. That may seem like a slight against their customers, but it’s the reality of the situation. Priorities seem to have been settled onto the backburner.

(How much do insurers spend on advertising?)

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 Insurance 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. It still doesn’t completely explain to their customers why their rates are increasing; Swope just gave an overarching statement. The lines for customer service were probably ringing off the hook after that one.

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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 into customer service in order to speak to an agent and ask for assistance. There might be a bit of a wait time, but it will be worth it for you to know what your new average rate is going to be. 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:

1. Get insurance quotes online and/or contact a local independent insurance agent who represents several insurance companies. There’s a wide range of choices out there.

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. You’ll also want to make sure you understand the types of coverage offered – you could benefit from a different plan if it’ll save you money and give you the protection you need.

We’re talking discounts here, not reducing coverage and increasing your risk to save a buck or two. This is more about looking into replacement coverage if you’re going to be unable to afford the price increase. Don’t leave yourself exposed to save money, stay both safe and protected.

Read more: Top homeowners insurance companies in Texas.