Nov. 17--State Farm Lloyds must pay home insurance policyholders $310 million in refunds and interest for overcharges stretchingback as far as six years, the state's insurance commissioner ordered Monday.

The order completes insurance reforms state lawmakers started in 2003, Insurance Commissioner Mike Geeslin said in a written statement.

"There is evidence, there is law, and between the two you come up with $310 million," he said.

Kevin Davis, a spokesman for State Farm, said the company was disappointed with the decision and insisted its rates have always been fair and justified.

"This type of regulation threatens the free market place and creates an unstable environment for insurance companies and policyholders," he said.

State Farm has 10 days to appeal. An appeal would put refund payments on hold until the courts resolve the case.

The order is the latest development in a 6-year-old case in which regulators ordered the company to cut its rates 12 percent.

That order followed major reforms to insurance regulation by state lawmakers in 2003 after years of record increases in home insurance rates. Mold and water claims prompted the rate increases.

State Farm, Texas' largest home insurer with about 1.2 million policyholders, sued the state, and the case bounced around until it was finally kicked back to Geeslin for a ruling this year.

The refunds and interest fall short of the $1 billion repayment sought by the Office of Public Insurance Counsel, which represents consumers before the Texas Department of Insurance.

The agency did however claim victory for getting consumers refunds through 2008. The insurance department had initially argued the refunds should apply to consumers through 2006.

"Because of our participation, consumers will get another $110 million they would not have gotten if not for OPIC's participation in this," said Deeia Beck, head of the consumer agency. She is still reviewing the order to determine if the agency will take any further action in the case, she said.

The refund amounts to 6.2 percent of policyholder premiums for those the company insured from September 2003 to August 2004.

For customers insured from September 2004 to July 2008, the refund amounts to about 3.4 percent of premium for each year of coverage.

For example, homeowners insured by State Farm during the entire period who paid $1,000 per year in premiums, could expect to receive a refund of $200, not including interest, according to a state consumer agency.

Existing policyholders will receive refunds in the form of credits when they renew their policies. Those who are no longer customers or don't want to renew will receive checks, according to the state.

Alex Winslow, head of consumer group Texas Watch, called the order a slap in the face of policyholders.

"This is a joke. There is no doubt this refund is a pennies -on-the-dollar settlement," he said, adding that he wouldn't be surprised to see the case drag on another six years if State Farm appeals.

State Farm announced plans to increase rates statewide an average of 8.5 percent in September. Homeowners in southern Harris County and in Galveston County would see increases averaging as high as 20 percent.