Most of the time, when there is news that involves changes to insurance rates, it is because the insurer is raising them. Not this time! State Farm is going to cut homeowners insurance rates in California. It is so nice to hear good news from an insurance company!
It isn’t often that I hear about an insurance company that has announced that they are going to lower their rates. Actually, I’m not sure I’ve ever heard of an insurer willingly choosing to lower its rates. That is exactly what is happening, though.
This will begin on April 15, 2013. This was announced at a news conference in Los Angeles that was held by California Insurance Commissioner Dave Jones and State Farm Chief Executive Tom Conley.
Californians who have their homeowners insurance with State Farm are expected to see average annual premiums cut by $100 in 2013. More specifically, rates will fall 12.3% in Los Angeles County, 14.1% in Orange County, and 12.4% in San Diego County. Rates will go down 21% in Sacramento County and 8.5% in San Francisco.
According to State Farm, this markdown of rates will be seen by 85% of the company’s 1.6 million homeowner customers in California. In addition, the company said that about 250,000 renters will also be getting smaller renter insurance bills when their policies renew this year.
Here’s what California Insurance Commissioner Dave Jones and to say:
State Farm is demonstrating that insurers can serve customers well and operate profitably at the same time. As the economy continues to recover, this rate reduction will no doubt alleviate some of the financial burden many homeowners are experiencing.
This rate drop is the result of a new homeowners insurance rate-setting system that was developed by State Farm and approved by California Insurance Commissioner Dave Jones. The program takes a more detailed look at the micro-zones where homes are located. This is a change from basing the potential risk represented by a homeowner on the policyholder’s zip code. The new system also takes into account things like geology and fire danger.
Douglas Heller is a senior advocate with Consumer Watchdog. He points out that other insurers can use State Farm’s new system to determine whether or not they are overcharging customers. What if they choose not to do so? It is possible that their state’s Insurance Commissioner will ask that question for them, and open a proceeding to find out the answer.
Image by Michael David Peterson on Flickr