State Farm is proposing changes to home insurance deductibles that consumer advocates warn would reduce the amount consumers could collect on claims.

As part of a notice to Texas insurance regulators that it plans to increase homeowner rates an average 9.6 percent in October, the state's largest insurer said it plans to move all current customers to a minimum 1 percent deductible starting in December.

That means deductibles would be charged as a percentage of the home's insured value rather than a flat dollar amount.

For example, the owner of a house insured for $200,000 with a flat $1,000 deductible and a $10,000 claim would collect $9,000 from an insurer. But with a 1 percent deductible, the homeowner would recover only $8,000 because the 1 percent deductible would be $2,000.

With a 5 percent deductible, the same homeowner would collect nothing from the insurance company.

State Farm is making the changes because of higher claims volumes and costs, spokesman Kevin Davis said. Shifting more costs to the homeowner allows the company to limit increases on premiums, he said.

The company has paid more than $350 million in catastrophe claims in 2011, mainly “due to spring hailstorms and wildfires,” he said.

Insurers historically have required percentage deductibles in wind and hail policies and have offered them as a lower-cost option for other types of coverage.

Allstate, Texas' second-largest insurer, offers fixed-dollar deductibles, although many policyholders have a 1 percent deductible, spokesman Joe McCormick said.

If approved by regulators, State Farm will require customers to have a minimum 1 percent deductible for all claims, and the company is eliminating the options for flat-dollar deductibles that ranged from $500 to $4,000.

Using percentage-based deductibles means higher out-of-pocket costs for consumers who file claims, said Alex Winslow, head of consumer group Texas Watch. It also would mean policyholders would collect only for the most extreme losses.

“With higher costs and less coverage, insurance will become a virtual illusion for most middle-class homeowners,” Winslow said, noting that other insurers are likely to follow if State Farm is allowed to move everyone to percentage deductibles. “This will mean higher costs for consumers, period.”

As for the planned rate increase, the premium change for any customer will vary based on the home's age, coverage and other factors.