The Texas Department of Insurance says the increase will now be about 4.5 percent for its 300,000 homeowner customers.
The original rate request was filed in June 2009. Current rates will stay in effect until at least March 16. Homeowners already paying the higher rate will not get a refund.
Insurance Commissioner Mike Geeslin described the original rate increase request as "excessive and unfairly discriminatory."
Farmers spokesman Jerry Davies says the agreement shows that the company is committed to the Texas marketplace.
