State Farm bails on Florida homeowners

The largest homeowners insurer in Florida is canceling the policies of 125,000 of its most vulnerable customers beginning Aug. 1, halfway through the 2010 hurricane season.

The company, State Farm Florida, began sending out cancellation notices this week to nearly a fifth of its 714,000 customers, most of them in the state’s hurricane-prone coastal regions.

A spokesman for State Farm said the decision was the direct result of its failure to win a 47.1 percent rate increase from state regulators.

State Farm stopped writing new policies and sought the increase a year ago, saying severe losses from a series of devastating hurricanes in recent years had rendered its business model unworkable. It said that without the large increase, it would be insolvent by the end of 2011.

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