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State Farm startup sets sights on renters market

HiRoad Assurance Co., the Rhode Island-focused subsidiary of State Farm Mutual Automobile Insurance Co. that introduced a direct-to-consumer auto insurance product in late 2017, is planning to expand into the renters market.

A tenant homeowners form, rate and rule filing submitted by HiRoad in December 2017 to the Rhode Island Department of Business Regulation captures certain key elements of the renters insurance product being offered on a countrywide basis by several State Farm subsidiaries, including as it pertains to rating factors, discounts and surcharges. But there appear to be several unique features of what HiRoad has proposed that may set its product apart from other State Farm companies and prospective unaffiliated competitors.

"The company knows that customers interested in HiRoad auto insurance are also interested in renters," a company spokesman said. He added that more information about the product will be made available upon the filing's approval.

HiRoad originally requested an effective date of Feb. 19 for new renters business, but the filing remained open as of Feb. 28 pending the company's response to the second of the regulator's two objection letters. The regulator noted in its most recent objection letter dated Feb. 13 that final review of the filing would also be dependent upon its closure of a State Farm Fire & Casualty Co. rate filing for its independent Rhode Island homeowners, renters and condominium unit owners policy that has been pending since October 2017.

State Farm, which does not market new business in Rhode Island and does not have captive agents in the state, reported that the program had only 1,726 policies in force and $1.1 million of annualized written premium.

The company had identified its relatively minimal Rhode Island presence through its traditional distribution channel in its rationale for launching HiRoad in that state as a way to test advanced insurance and technology concepts.

Among the ways in which HiRoad's renters product differs from State Farm's is the opportunity for customers to earn rewards for the completion of optional tasks or challenges and the referral of new customers. Accrued awards may be redeemed for a monthly statement credit, discounts or credits toward certain third-party products or services, and/or charitable donations. HiRoad's auto product also includes the rewards program.

In terms of the physical damages and liability coverages provided under the HiRoad and State Farm renters policies, there are a number of similarities in the limits that apply to various types of items. One of the noteworthy differences is in the amount of coverage for computers and equipment: The HiRoad limit of $10,000 is double what the State Farm policy provides, according to a review of the respective filings.

The proposed HiRoad policy offers a range of optional coverages and special limits of liability for certain categories of items. One of them involves a $1,000 limit for what the filing labels "commercially manufactured two, three, or four wheeled personal conveyances powered only by or assisted by an unmodified motor or engine with a manufacturer's power rating of no more than 1 horsepower and capable of a top speed of no more than 20 miles per hour."

HiRoad said in the filing that it plans to set rates for the renters product at a level that it believes will be competitive in the Rhode Island market.

It is not alone among startups in introducing renters insurance in that state. Lemonade Insurance Co. received approval in September 2017 for a new renters and condominium program in Rhode Island. More recently, Markel Corp.'s State National Insurance Co. Inc. obtained the go-ahead on Feb. 13 for a new tenant homeowners program to be marketed through the digital platform of Jetty Insurance Agency LLC.