State Farm Florida, the third largest insurer of homes in the state, has just been approved for an average 6 percent rate increase on its home insurance policies.
It's the fifth increase approved for State Farm's home insurance policies in Florida since late 2009.
State Farm policyholders also will face a higher deductible on their Florida home insurance in many cases. Out-of-pocket payments on claims will rise from a minimum $500 to a minimum $1,000 on most homes, according to the increase approved by Florida's Office of Insurance Regulation.
The approval comes as Florida's largest insurer of homes, state-backed Citizens Property Insurance, also is seeking a rate increase to top 10 percent on average.
State Farm had wanted to raise rates in Florida even more — by nearly 15 percent on average.
That's after receiving approval to raise its rates for existing home insurance policies an average 27.9 percent effective in 2009; 4 percent effective in 2010; 6.6 percent and 18.8 percent, each effective in 2011.
The new hike takes effect for existing policies starting Feb. 1, officials said.
The pain won't be evenly spread. On average, State Farm Florida's home insurance rates will go up 6.4 percent for owners of houses and 6 percent for renters insuring their belongings. Rates for insurance on condominiums will drop on average by 5 percent, regulators figure.
Changes for individual policyholders may vary widely from those averages. After State Farm received a nearly 19 percent increase last year, some South Floridians saw their rates jump more than 100 percent.
South Floridians typically pay higher rates for home insurance than residents elsewhere in the state because of higher risks for hurricanes, according to the Insurance Information Institute, an industry trade group.
Home insurance rates have been soaring in Florida in recent years for several reasons: rising costs to rebuild homes, higher prices for re-insurance and a "hurricane history that has proven this to be a very unprofitable market for property insurance," said Lynn McChristian, the Institute's Florida representative.
Approval of a lower-than-requested rate increase for State Farm "may force the insurance company to come back and ask for another rate increase later," McChristian said.
State Farm Florida said it has sought increases, because it has paid out more in claims and expenses than the money it received in premiums on home insurance policies in recent years
That's contributed to the company shedding more than 100,000 home insurance policies, losing its spot as the largest private insurer of homes in Florida. It ranked second among private insurers after Universal Property & Casualty Insurance of Fort Lauderdale based on the number of policies in force this spring, state data shows.
Citizens insures the most homes in Florida as the state's insurer of last resort. Besides raising rates, Citizens also is looking to shed some 300,000 policies — or a fifth of its portfolio — to cut its risks.