State Farm Insurance will drop 125,000 homeowners’ insurance policies as the insurer reduces its exposure to hurricane risks in Florida. Agents say that State Farm is not only cancelling some residential policies – it’s dropping some commercial property policies as well.
Some of Florida’s smaller, new insurers that entered the market have already failed, and policyholders are discovering that insurance policies from other carriers have higher premiums. Some smaller insurers have only up to $6 million in assets, and consumers should consider whether their insurer could pay claims. And if so, they should assess how many events an insurer can cover annually either through reserves or reinsurance coverage.
Many more policyholders are taking policies with state-run Citizens Property Insurance Corp.; but if the state fund cannot cover claims, the costs would be shared with state taxpayers.
Source: Naples Daily News (FL) (07/25/10) Layden, Laura
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