State Farm auto insurance plans to reduce rates in August

State Farm, the largest auto insurer in New Mexico, is cutting its rates next month, the company has announced.

The change, effective Aug. 13, will drop the overall premium cost by 4.5 percent and save its 337,000 New Mexico policyholders a total of about $11.6 million, according to State Farm. The company has been reducing rates in individual states, starting with Illinois in April.

A State Farm spokeswoman in Colorado said the company’s position, the strength of the U.S. economy and other factors have allowed the company to reduce rates in some states.

“State Farm as a a whole, because of our financial strength, we’re able to pass the savings along to our customers,” spokeswoman Tamara Pachl said.

A reduction in insurance rates is a relatively rare occurrence. State Farm last dropped its rates in 2007 by 6.5 percent, Pachl said. The company filed for this year’s rate cut in June.

New Mexico is a “file-and-use” state, meaning the state Office of the Superintendent of Insurance does not review an auto insurance filing the way it reviews an insurance company’s justifications for increases or decreases in health, property or casualty insurance, said Heather Widler, a spokeswoman for the insurance superintendent.

“We have seen for several years that several carriers have chosen to increase their rates,” she said. “It’s not terribly surprising that they back down on their rates. I don’t believe State Farm is alone.”

New Mexico is among the states where auto insurance providers charge the highest premiums, thanks to a high rate of auto theft in the Albuquerque metro area, Widler said. Because the city is a draw for people living outside the metro area, the auto theft rate there affects insurance rates elsewhere.

The National Insurance Crime Bureau website listed Albuquerque No. 1 for car thefts in 2017 with nearly 10,000 total. Santa Fe ranked 111th among metro areas, with 384 thefts last year.

Although the State Farm rate reduction takes effect in August, it won’t be applied to a current policy until the policy is renewed, Pachl said. The rate for specific New Mexico customers varies according to their coverage; individuals with questions can contact their local State Farm agent to discuss their individual situation, she said.