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State Farm to begin shedding thousands: State Farm will begin mailing nonrenewal notices to 125,000 homeowners in Florida next week.

Jan. 29--Starting Monday, homeowners who hold State Farm Insurance of Florida policies will begin receiving letters from the insurer saying their policies won't be renewed.

But agents interviewed said relatively few of those policies will likely be in South Florida because State Farm no longer insures many homes here.

The company will be dropping 125,000 policies throughout the state as part of a settlement reached with the Office of Insurance Regulation to keep State Farm from abandoning Florida entirely. The company was also granted a 14.8-percent rate increase in the deal. To maintain solvency, the company had argued it needed to dramatically reduce its hurricane exposure in this state.

In recent weeks, State Farm told its roughly 850 agents which of the policies they handle won't be renewed. Agents, in turn, have begun to notify their clients.

But the official word will come from the company, giving each policyholder at least six months to find another insurer. Notifications will be sent on a rotating basis.

Agents said they believe a larger percentage of the policies will be dropped on the west coast of Florida -- from Pasco through Collier counties -- rather than in South Florida.

Though he didn't have a specific breakdown about where dropped policies were located, Chris Neal, a State Farm spokesman, said State Farm doesn't have that much exposure in South Florida.

He noted that State Farm hasn't written new coverage in this part of the state since 1992, when Hurricane Andrew hit. Also, a few years ago, the company dropped 50,000 policies that covered homes within a mile of the coast to further reduce its hurricane exposure. Many of those policies were in South Florida.

At least 13 companies, including American Integrity, Florida Peninsula, Security First and United Property & Casualty, have been given the go-ahead by State Farm to work with its agents to provide new coverage for the policies being dropped.

Craig Duncan, a State Farm agent in Clearwater said he began notifying customers last week. "It's been amazingly smooth so far. At least we can tell them that we'll have as good a selection as any other agent."

Duncan said that more than 40 percent of his State Farm policies won't be renewed.

He already has been told by some companies that they won't write policies in Pinellas County.

In that section of the state, insurers shy away from coastal as well as sinkhole risk.

Roger Desjadon, chief executive of Florida Peninsula, said his company is willing to take on some of the dropped State Farm policies because it has the capacity to grow its business. He said the company is willing to consider homes in any part of the state.

"Location isn't the only determinant for getting coverage. Hurricane Wilma showed there's no section of the state exempt from hurricane exposure," he said, adding the condition of the house and its age are greater factors in determining coverage.

The National Association of Insurance and Financial Advisers-Florida has organized an expo next Tuesday in Sarasota to help acquaint State Farm agents with the 13 companies that are interested in picking up some of the dropped policies.