State Farm Won't Renew Coverage For Many on Ala. Coast

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MOBILE, Ala. (AP) - State Farm says it won't renew insurance coverage for some 2,600 policyholders in coastal Mobile and Baldwin counties. The decision mostly affects buildings and homes near the beaches.

Assistant State Insurance Commissioner Ragan Ingram says the majority of customers affected live within one-thousand feet of shoreline of Mobile Bay, the Intracoastal Waterway, Orange Beach
and the Gulf of Mexico. Ingram calls the decision, "disappointing."

A State Farm spokesman says letters have been mailed this week warning all affected customers about the change. Among the reasons
cited were frequent hurricanes, coastal construction growth and the cost of reinsurance.

State Farm also faces hundreds of Katrina-related lawsuits on the Mississippi Coast. A recent suit in Gulfport against State Farm by a Biloxi couple brought a $2.5 million jury award that was later reduced by a federal judge to $1 million.

Illinois-based State Farm is Alabama's largest insurer of homes.

Michael Morris, of the independent Morris Insurance Agency, says those who sell insurance in Mobile and Baldwin counties have been able to find coverage for homeowners who are dropped, whether it's
through one of the few firms adding customers, or by tailoring a policy by stitching together coverage components from different insurers.

Last August, Montgomery-based Alfa ended its insurance coverage for some policyholders in Baldwin and Mobile counties.

(Copyright 2007 by The Associated Press. All Rights Reserved.)