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State Farm Home Insurance Rates Exceed Most Rivals in Dallas Area

Texas has long ranked at or near the top of all states for highest homeowner insurance premiums, thanks to our toothless Department of Insurance and the Republican Legislature that took away almost all enforcement power. Now it’s no surprise to learn that State Farm is going to set new records for insurance premiums in the Dallas area. The details were provided by the Dallas Morning News. Here are excerpts:

State Farm Insurance is charging some of the highest premiums for homeowner coverage in North Texas despite the company’s repeated claims — in court and the public arena — that its rates are fair and competitive with other major insurers.

New rate figures compiled by the Texas Department of Insurance show that State Farm, the largest property insurer in the state, is charging premiums well above average rates for the 27 largest companies doing business in the Dallas area.

Premiums charged by State Farm are significant because the company has been locked in a legal battle for nearly eight years with state regulators, who contend the insurer owes its customers at least $350 million for overcharges dating to 2003. The state’s consumer advocate for insurance once estimated the overcharges at close to $1 billion.

For example, State Farm said its annual premium is $1,679 on a 10-year-old brick home in North Dallas insured for $150,000. That was well above the average $1,298 premium. Just three small companies had higher premiums than State Farm, and one — Metropolitan Lloyds — was almost the same.

Figures were similar in other Dallas-area ZIP codes studied by The Dallas Morning News . In Austin, Houston and San Antonio, State Farm premiums were also among the highest listed of the two dozen or so companies selling homeowners policies in each area.

Consumer representatives said they have noticed that State Farm is charging higher rates than most insurers.

“I am not surprised at all,” Texas Public Insurance Counsel Deeia Beck said of the company’s rates. She noted that when several insurers were asked to lower their rates after a massive insurance reform law was passed by the Legislature several years ago, only State Farm said no.

“It has had a cumulative effect. State Farm was the only company that refused to lower its rates, so their base has been higher for several years,” she said.

Alex Winslow of Texas Watch, a consumer group active in insurance issues, said State Farm continues to be “the bully on the block” in property insurance and can often dictate the terms of the market because of its size. State Farm Lloyds, the company’s home insurance subsidiary, holds nearly 29 percent of the market.

“The Texas Department of Insurance has basically been letting them charge whatever they want. State Farm is calling the shots,” said Winslow, pointing to twin rate increases by the insurer in late 2009 and early 2010 that together boosted rates as much as 35 percent for many customers in Dallas County and surrounding areas.

Former state Insurance Commissioner Mike Geeslin asked State Farm to reconsider the rate hikes and even went so far as to set up a special place on the Insurance Department’s website so that State Farm policyholders could see how much more they were going to have to pay in premiums.

But State Farm ignored Geeslin, an appointee of Gov. Rick Perry, and he eventually gave up.

Under the state’s file-and-use system for insurance rates, companies can increase premiums once they have notified the Insurance Department. The commissioner can review the rates and reject those considered excessive or unjustified, but a company can challenge the decision in court and keep charging the higher rates.

“Until we have a process that allows the commissioner to intervene more forcefully on behalf of consumers, large insurers like State Farm are going to continue to control the market,” Winslow said.

An analysis of rates charged by 27 insurers in several ZIP Codes in the Dallas area shows that overall home insurance prices have not changed significantly from a year ago, probably reflecting the fact that insurers had a very profitable year in Texas in 2010.

Shopping for Insurance

Getting the Best Deal

Some tips for how to get the best deal on homeowners insurance:

  • Decide what you need: Examine coverages and coverage amounts.
  • Shop around: Rates vary widely among companies. Ask several for different rates, but make sure you’re asking about the same coverage.
  • Deductible: Choose the highest deductible you can afford, because you’ll lower your premium.
  • Discounts: Ask an agent which ones you might qualify for.
  • Beyond price: Look at other factors, including a company’s financial rating, record of dealing with consumer complaints and the status of licensing by the state.

Factors in Setting Premiums

  • Age, location and condition of the house: The older or worse condition, the higher the cost. Weather and crime history in your area also will have an effect.
  • Construction materials: Insurance for brick homes is cheaper than for frame homes.
  • Fire protection: The better the fire services in your area, the better the rate.
  • Claims history: The more you’ve filed, the higher your premium.
  • Credit score: Companies are allowed to use it but can’t refuse you business based solely on your credit history.

MORE INFORMATION: Compare rates at, a state-run site, or call the Texas Department of Insurance’s consumer help line at 1-800-252-3439.

Rick Perry and Insurance

Gov. Rick Perry made property insurance a key campaign issue in his first race for governor in 2002, taking on Farmers Insurance and other companies for sharply increasing rates after a surge in mold and water damage claims that year. But he has not talked much about insurance in recent years, even though Texans pay the highest homeowners premiums in the nation. The governor’s main impact on insurance is his appointment of the state insurance commissioner and his office’s input on insurance bills passed by the Legislature. In most cases, those bills must be signed by the governor to become law. He has consistently opposed a prior review system under which the state would evaluate rates before insurers can implement them.

Bob Kraft

I am a Dallas, Texas lawyer who has had the privilege of helping thousands of clients since 1971 in the areas of Personal Injury law and Social Security Disability.

About This Blog

The title of this blog reflects my attitude toward those government agencies and insurance companies that routinely mistreat injured or disabled people. As a Dallas, Texas lawyer, I've spent more than 45 years trying to help those poor folk, and I have been frustrated daily by the actions of the people on the other side of their claims. (Sorry if I offended you...)

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