NU Online News Service, Oct. 6, 2:59 p.m. EST

State Farm will be raising rates by a statewide average of 5 percent in Alabama, but rates in the state's two coastal counties will remain flat for the most part.

The Alabama Department of Insurance has approved the rate increase.

State Farm Spokesman David Majors says the increases are needed for “anticipated future needs,” but they do not incorporate losses from severe tornadoes in April or changes in inland exposure from a new version of a hurricane model by Risk Management Solutions (RMS).

The state's largest writer of personal-property insurance according to Highline Data, State Farm is also changing the way it doles out discounts, Majors says.

The insurer has been giving discounts to homeowners if they fortify homes based on certain standards from the Insurance Institute for Business and Home Safety. The discounts were spread across all perils covered by the homeowners' policy.

Now the discounts will be applied directly to the portion of the policy premium that covers hurricane damage, Majors says.

“We think it's a better way to match premium price to risk,” Majors adds.

State Farm has been able to keep rates basically flat in Baldwin and Mobile counties in recent years. About 90 percent of the residents in these counties will see no rate increase. Northern parts of the counties will see an average 4 percent increase, Majors says.

The rate increases take effect Nov. 15 for new business and Jan. 1 for renewals.

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State Farm Raising Home Rates in Alabama

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