Chaney: Allstate Will Write Coverage For Waterfront Homeowners

LONG BEACH (WLOX) -- Wednesday, State Farm told Mississippi officials that it will drop or curtail coverage for some 5,000 policyholders and increase rates for others. And apparently, they believe the average 13 percent increase is already a done deal.

A letter the company sent to Insurance Commissioner Mike Chaney states, "It is State Farm's understanding that this filing was signed by former Commissioner George Dale and we believe it should be deemed approved."

Chaney says that may or may not be the case, and his office is checking into what may have been agreed to by the former commissioner.

Meanwhile, Chaney says he's found a solution to State Farm's other announcement that it will drop some or all coverage on properties closest to the water.

Long Beach's mayor says under State Farm's new 1,000 feet from the water guidelines, his best guess is everyone south of the old city hall is about to lose their State Farm property insurance.

"Many people in our community use them. That's their insurance. And this is possibly just another road block to recovery, another dagger in the heart," Mayor Billy Skellie said.

Another blow? Some State Farm customers just north of the tracks will also lose out. The company will drop wind coverage on properties within 2,500 feet of the Mississippi Sound and the waterways that feed into it.

The changes are expected to impact 4,000 to 5,000 State Farm customers. But State Insurance Commissioner Mike Chaney says those people won't fall through the cracks, thanks to the state wind pool and other companies stepping up to provide coverage.

"The good news is that today I have been able to announce that Allstate is willing to come in and write coverage from the beach to 1,000 to replace those people that are losing coverage by State Farm. Allstate will require that the homeowner, if they go with Allstate, take their automobile insurance with them to Allstate," Chaney said.

He says State Farm's pull out could have been worse.

"We've been able to negotiate with them to stop writing at 1,000 feet. They'd originally said they would not renew to 2,500 or even farther than that, but they've changed their minds. So I would have to say that they have at least tried to work with us."

Chaney says he also negotiated with the company to delay the changes until after this hurricane season, and spread out the non-renewals over a one year period.

As coast residents struggle to recover, Mayor Skellie worries this setback could be the last straw for some.

"Certainly it could discourage them to a point. I hope not. I hope people hang in and try to finish their job," Skellie said.

State Farm points out it hasn't raised homeowners' rates since Katrina. The company is also changing its policy deductible rules for hurricane and all peril claims. Basically, the closer you are to the gulf, the higher the deductible.