State Farm wins battle with state

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State Farm wins battle with state

Insurer to raise condo rates, exclude mold coverage

By Purva Patel Sun-Sentinel

December 21, 2002

State Farm has come out victorious in a six-month battle with the Florida

Department of Insurance over mold exclusions and homeowners' insurance rates

for condo associations.

The state's largest insurer said condo associations would see their State

Farm homeowners' insurance policies rise a statewide average of 132 percent

and none of the policies will include mold coverage when they come up for

renewal.

This week, the department granted the company a 70 percent average increase,

but it essentially doesn't mean much. That's because under Florida law, the

company can raise rates on a case-by-case basis as long as the policyholder

agrees to the rate.

The company will not renew policies if the holder doesn't accept the rate,

said Tom Hagerty, spokesman for State Farm.

" We felt we needed this rate increase because our claim costs had been

increasing for every dollar we collected on premium increases, " he said.

The company had asked for a 132 percent increase earlier this year, but was

shot down in June when the department said the company could only justify

about half that amount.

The company has about 3,900 condo association policies statewide, 1,000 less

than when the company announced it would stop renewing the policies this

past summer because it had to provide mold coverage.

The company won't take on new association business or take back those who

chose not to renew before the agreement was made, Hagerty said.

State Farm has about 18 percent of the condo association market in the

state, with most of the policies in southeast Florida and the Tampa-St.

sburg area.

The insurance department said it recognized that condo associations would

have to resort to a secondary market of insurers that aren't regulated by

the state. Those insurers charge thousands more than State Farm and don't

offer mold coverage.

" We are certainly glad State Farm has continued to write this business in

Florida, " said Tami , spokeswoman for the Department of Insurance.

If condo associations and homeowners can't find insurance through another

company, they can buy it through the state's insurer of last resort the

Citizens Property Insurance Corp.

State Farm's triumph comes only two days after the insurance department and

Florida Farm Bureau Insurance Co. came to an agreement to limit mold

coverage on residential homeowners' insurance policies.

Though no one would say whether the agreements would set a precedent for

about 240 pending petitions for exclusions or limits of mold coverage, the

moves show some progress has been made on the debate.

" Hopefully this means this bottleneck is about to be broken, " said Sam

, vice president of the Florida Insurance Council.

State Farm is still discussing mold exclusions on its residential

homeowners' policies with the insurance department.