Homeowners Coverage Getting Less And Less

For sure, anybody in Grand Prairie, Arlington, Fort Worth, Hurst, Euless, Bedford, or anywhere else in North Texas wants to get rates as cheaply as they can on their homeowners insurance policy, but they would like to thing their coverage is staying the same. Well that may not be the case.
The Houston Chronicle published a story On September 12, 2011, which most homeowners would be interested to know. The author is Purva Patel, who has written on the topic of insurance before. The title of the article is, “State Farm Move Could Mean Less Homeowner Coverage.”
The article tells us that State Farm has proposed changing home insurance deductibles. Most anybody who has tried to get their rates lowered knows that buy raising the deductible, the yearly cost for the insurance goes down. What is different here is that State Farm is trying to make the new coverage mandatory. Consumer advocates warn this would hurt some.
It does not sound like a lot, but the proposal is to move all current customers to a minimum 1 percent deductible starting in December. That means deductibles would be charged as a percentage of the home’s insured value rather than a flat dollar amount.
For example, the owner of a house insured for $200,000 with a flat $1,000 deductible and a $10,000 claim would collect $9,000 from his insurance company. With a 1 percent deductible, the homeowner would only recover $8,000 because the 1 percent deductible translates to $2,000.
With a 5 percent deductible, the amount recovered would be $0.
State Farm is asking the Texas Department of Insurance, to allow this in order to keep from raising premiums.
Right now, consumers have an option. They can take a flat dollar amount deductible, such as $500 or $1,000, or they can get a percentage deductible. The effort here is to make the percentage deductible mandatory, with 1 percent being the lowest.
The consumer group, Texas Watch, says this simply means higher costs for consumers and is against it.
In addition to this change, State Farm is also asking for an overall increase in rates.
They say the increases are necessary because the company paid out more than $350 million in catastrophe claims in 2011 to date, mainly “due to spring hail storms and wildfires.”
State Farm is also, on a positive note, intending to increase a discount for customers who have both cars and homes insured with the company to 25 percent from 20 percent.