The department has accused Farmers of misusing credit scoring, failing to disclose rating information to consumers, making excessive profits and not providing proper discounts to consumers.

It has asked Farmers to refund $150 million to customers and roll back increases. Farmers has also been hit with a lawsuit by the state attorney general's office for alleged unfair and deceptive business practices.

Jeffrey C. Beyer, a spokesman for Farmers Insurance in Austin, Texas, said the state's claims were meritless, but without an extension of the order the company would have been in violation and would have had to begin non-renewing policyholders or face fines. "If we didn't non-renew, we'd be out of compliance," he said.

Farmers has about 700,000 customer households or about 20 percent of the Texas market. The Los Angeles-based insurer was stung by a Texas jury last year with a $32 million verdict for mishandling a homeowner's mold damage claim.

The company said that as a result of ongoing discussions with the governor's office, the Texas Department of Insurance and the Office of Attorney General, it would immediately begin offering homeowners policies to its existing customers whose policies were scheduled to renew through Dec. 10, 2002.

Mr. Beyer said the company is hopeful it can reach an agreement with the state, noting that, "the governor is aware it's a serious problem.

John Hageman, Farmers' vice president and Texas executive director, in announcing the temporary resolution, said that "Farmers, the governor's office, the TDI and the OAG are committed to reaching a resolution that will keep Farmers in the Texas homeowners market. This 30-day extension of the cease and desist order allows us to continue to offer insurance to our customers while we work out our differences."

Mr. Hageman said that, "because of the improvement in loss trends, Farmers also announced that for policies effective Nov. 11, its homeowners rates in Texas would drop by an average of 6.8 percent throughout the state."

He added that the carrier has not had a rate adjustment for nearly a year. "As is normal with changes in market conditions, rates are constantly being adjusted up, or down, depending on changing loss experience. We are pleased to pass along this improvement in our experience to our customers."

He said Farmers' first priority now is to quickly get word to its homeowners customers. Farmers agents will play a key role in this process. Farmers homeowners customers who are renewing between now and Dec. 10, he said, are urged to immediately contact their local Farmers agent.

"Going forward, we are committed to working together with Governor Perry, the TDI and the OAG to permanently resolve this matter and to achieve the best solutions in the interests of Texas insurance consumers," he said. "We know that all parties have this same goal. We regret the inconvenience we know this has caused many of our homeowners customers."

He noted that Farmers' agents continue to offer auto, commercial, life and other lines of insurance and financial services to Texas customers.

The negotiations between Farmers and the state, which have dragged on for months, have taken place during a time when home insurance rates have soared and a hot election campaign was underway. That campaign saw Republican Gov. Perry and his Democratic opponent Rick Sanchez both decrying the actions of insurance companies.

Asked if the end of the election was a factor in the most recent events, Mr. Beyer said, "no comment."

"I am pleased that Farmers Insurance has taken this small step while negotiations continue," Gov. Perry said. "This standstill agreement benefits Farmers' customers in the short term while providing additional time for both sides to reach a resolution."