Three of Alabama's four largest home insurers are raising rates,
although State Farm Fire & Casualty Co., the state's largest, is
giving coastal residents something of a break.

No. 1 State Farm, No. 2 Alfa Mutual group and No. 4 Farmers Insurance
Group — the firms that have won state approval for increases — together
control 57 percent of the state's homeowners market.

Company officials said costs to policyholders will vary on where they
live, their house and other factors. All said the rate increases are
meant to make sure they have money to cover future losses.

"It's about having enough premium and protection to pay future claims,"
said State Farm's David Majors.

Many insurance companies saw the value of their investments decline over
the last year, said Amy Bach, executive director of United
Policyholders, a California-based group that advocates for consumers.

"That's the cycle we've seen forever," Bach said. "Whenever they're
getting bad returns on their investments, they look for ways to make
things up by raising rates or becoming more creative in restricting
claims."

In Alabama, No. 3 Allstate Corp. also wants rate changes, Insurance
Department spokesman Ragan Ingram said. The Alabama Insurance
Underwriting Association, the state insurer of last resort known as the
"Beach Pool," raised rates in July by an average of 5.5 percent on its
12,000-plus customers in Mobile and Baldwin counties.

In 2006, the most recent year available, a homeowners policy in Alabama
averaged $894, according to the National Association of Insurance
Commissioners. That was the ninth-highest dollar average nationally,
even though Alabamians were typically insuring homes valued at less than
the national norm.

In 2002, state homeowners paid 10 percent less than the national
average.

October's 25.7 percent increase is Farmers' third straight year of
double-digit price increases, for a statewide average increase of 69
percent since May 2007. Los Angeles-based Farmers, a unit of Zurich
Financial Services, grew its Alabama market share to 8.8 percent with a
reputation for low rates, local insurance agents have said.