Mold causing State Farm premium jump

December 22, 2002

NBC2 News

LEE COUNTY, Dec. 20, 2002 - Insurance rates for some condo associations are

about to go through the roof. State Farm has won approval to raise premiums

statewide an average of a 132-percent - a rate increase they've been seeking

for almost a year.

In June, the Florida Department of Insurance turned down State Farm's

request, saying the company could only justify a little over half the

increase.

Florida Insurance Council member Sam says the hike is badly needed.

" It's a substantial increase, but the alternative they were facing is a lot

worse. State Farm had about 5,000 condo associations' policies and it was

losing money on those policies. It had to have the rate increase to continue

to provide the insurance, " said.

State Farm is Florida's largest insurer, currently covering about 3,900

condo associations statewide - an 18-percent share of the market.

Not only is State Farm now getting its hike, the company is about to drop

mold coverage for condo associations. The coverage change would occur during

renewals.

Officials say mold claims are primarily the reason for the price increase.

In the past, State Farm has been one of only a few insurers that offered

mold coverage to condos.

The increase currently affects only condo associations, meaning common areas

such as roofs, hallways, and courtyards. It does not cover residences. The

new premiums will likely trickle down - resulting in higher condo fees for

residents.

Surprisingly, for many the premium increase may not be so bad. For example,

local State Farm officials say the premium for a 23 unit condo with almost

$2 million worth of coverage would cost about $2,700. The renewal on that

policy now will cost about $6,200.

While that seems like a lot, in some cases that same policy from another

insurer would cost up to $9,000.

As for homeowners, mold exclusions could be right around the corner. State

Farm has a request in to the insurance council to drop mold coverage from

policies.

A weeklong hearing on the exclusion is scheduled for mid January, with a

decision expected by February. If the company gets its way, mold coverage

would likely become an additional premium, similar to flood insurance.

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