State Farm No Longer Writes Insurance Policies For New Homeowners - WLOX.com - The News for South Mississippi

11/15/02

State Farm No Longer Writes Insurance Policies For New Homeowners

The Wyndhams are looking for their third home.

It seems like perfect timing. A spacious home for a growing family. But the timing may be off when it comes to insurance companies. In order to buy a home, you must have insurance. But what happens when companies like State Farm say "no" to new customers?

"If you're doing any financing, banks will naturally not finance anything if you don't have them insured and unfortunately with a big player as large as State Farm is moving out of the market, it eliminates your choices as much," said Ray Lines, who is helping his daughter look for a new home.

Broker Jim Atchison agrees. He says people will be less likely to qualify for higher price range homes. But the move also presents a problem for the home seller as well as the real estate company.

"We have run into problems where people want to buy a home or qualify for a certain price home,we have to actually decrease the amount of the home they are purchasing to account for higher taxes and insurance," Atchison said.

And the problem is not limited to new homeowners. You can be dropped if you file too many claims, or one unnecessary claim. If you have a mortgage on your home, you of course have insurance on it. So, if you're dropped, you may have to pay triple what you pay now for coverage, which can mean a rude awakening for people who have built their budget around a monthly home payment.

But there is a "bright side."

"What you can do is refinance your house at either a lower rate or a lower term and save the money that's coming in on this insurance increase," mortgage lender Jennifer Milligan said.

Money that will come in handy for an unstable sign of the times.

This latest move by insurance companies has been spurred in large part by water damage claims, as well as a rise in claims related to household mold over the past two years.

By Karla Redditte

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