State Farm, the largest home insurer in Florida, has asked state regulators to raise homeowners' rates an average of 6.9 percent following a pair of double-digit increases last year.
The proposed rate increase is contingent upon regulators letting State Farm exclude claims for mold damage from its base coverage. Without the exclusion, the company will withdraw the request and likely ask for a bigger increase, spokesman Tom Hagerty said Wednesday.
State Farm also wants to change the standard deductible on claims from $500 to 1 percent of the home's insured value. Homeowners would pay more to keep a $500 deductible but could get a price break by raising the deductible to 2 percent or 3 percent of the home's value, Hagerty said.
The rate request filed Tuesday comes on the heels of two rate increases last year that averaged 14 percent and 22.5 percent statewide.
Part of the reason State Farm needs another increase, Hagerty said, is that an arbitration panel in October granted less than the full 25 percent the company requested. The additional premiums would help cover higher claims and construction costs, he said.
With 921,000 homeowners policies in Florida, or about 25 percent of the market, State Farm plays a key role in how much homeowners pay statewide. When it kept rates low, the company helped hold down how much competitors charged. When State Farm sought higher rates, other companies followed suit.
State regulators last year denied State Farm's request to stop covering mold damage claims under its base policy. The company appealed and won a nonbinding ruling from an administrative law judge. The final decision is up to regulators.
Although the state has not approved mold exclusions, regulators have allowed other insurers to cap claims for mold damage under base policies at $10,000 per incident and $20,000 per policy period, which is typically one year, said Bob Lotane, a spokesman for the Department of Insurance Regulation. Customers can buy additional coverage up to $50,000 per policy period.
