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Nearly 7 hundred thousand State Farm Customers are happy tonight. After a year of fighting with the state over rates, and deciding to stop writing homeowners insurance, Mike Vasilinda tells us the insurance giant has negotiated a settlement that will keep it writing policies in Florida.

State Farm asked for a 47 percent rate hike in 2008. Then said it was leaving Florida last January when it didn’t get a dime. Charlie Crist said “Good Riddance.” But in a dramatic turnaround, the company and state have reached a deal to keep State Farm in Florida.

“The State Farm has been granted a %14.8, across-the-board rate increase for their condominium and homeowners policies,” Insurance Commissioner Kevin McCarty said.

In addition to the rate hike, the company will be allowed to drop 125 thousand customers, but no one will be dropped before August 2010.  Customers are excited

Joe Cain has been with State Farm more than 20 years.

“That’s great,” Cain said. “Oh wow, boy, if I had had to go to other insurers right now, some of these Mickey Mouse insurers, fly-by-night maybe, I don’t know. I was really worried.”

The leaner State Farm will still keep up to 800 agents will keep working. The agents’ association calls the news good for Florida.

“There are roughly 4 million homeowners policies in Florida,” lobbyist Tim Meenan said, “They’ve got 800,000 of them. Dumping them all onto the market at the same time would have created some havoc.”

State Farm will begin identifying which policies it will drop almost immediately. The rate hike will likely be in place for policies renewing as early as February.

State Farm customers are being encouraged to contact their agents after the first of the year to see if they are on the cancellation list.