AUSTIN -- Allstate Texas Lloyds has announced plans to raise Texas homeowners insurance rates by an average of 5.9 percent.

The rate hike takes effect immediately for policy renewals, but the Texas Department of Insurance could block the move if it finds the increase isn't justified.

Allstate withdrew a proposed 6.9 percent rate hike last month when state regulators signaled they wouldn't approve the increase.

Allstate, the state's second-largest home insurer, also announced an additional 2 percent rate increase for coastal residents to cover its reinsurance costs, or insurance the company buys for itself to help cover claims in the event of a catastrophe.

Allstate spokesman Bill Mellander attributed the rate hike to "the cost of doing business" in a state with a volatile history of weather catastrophes and to "broad loss pressures" on the company since its last rate increase.

The company lowered its earlier proposed rate hike based on updated information from the Texas market, he said.

"If I'm an Allstate customer, I'm looking at the financial stability of my insurer to meet expectations if I have to file a claim," Mellander said.

Insurance department officials said the agency will carefully review the proposed increase, just as it does every rate filing.

"We're required by law to ensure insurance rates meet four criteria: are they reasonable, not excessive, not discriminatory and are they adequate for the risks?" agency spokesman Jerry Hagins said.

Texas allows insurance companies to enact rate increases when they file them with the insurance department and without prior approval. But regulators can reject the rates after they've been implemented and order refunds.

About 700,000 of Allstate's 917,000 Texas homeowners policyholders are insured by Allstate Texas Lloyds. About 60,000 of its policyholders are in the 14 coastal counties along the Gulf of Mexico.

Consumer groups said state Insurance Commissioner Mike Geeslin should reject Allstate's plan.

"Here we go again," said Alex Winslow of Texas Watch, a consumer group. "Allstate just can't help itself."

Farmers Insurance, the third largest home insurer in Texas, said last month that it would revise its plan for a 6.6 percent statewide increase when regulators indicated they would turn down the proposal.

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Copyright 2007 by The Associated Press. All rights reserved.