New insurance option cleared for State Farm - One without mold coverage

[Guest guest]

http://www.lubbockonline.com/stories/030902/sta_0309020107.shtml

Saturday, March 9, 2002

Last modified at 12:47 a.m. on Saturday, March 9, 2002

© 2002 - The Lubbock Avalanche-Journal

New insurance option cleared for State Farm

Associated Press

AUSTIN (AP) - The Texas Department of Insurance on Friday approved a new

type of insurance policy for State Farm that the department says will allow

some customers to make substantial savings while giving them more choices.

The all-risk policy allows customers to tailor their coverage to their

individual needs, Insurance Commissioner Montemayor said.

All-risk policy

.. Texas Department of Insurance OKs new type of coverage by State Farm.

.. Policy allows customers to individualize coverage for specific needs.

.. Some customers will see big savings, but others will see increase in

premiums.

It also will provide reduced coverage for water damage including mold

repair, with an option to purchase mold remediation coverage at various

levels. Consumers also can get limited coverage for foundation repair.

A consumer advocate blasted the policy, saying the savings it offers are

" nothing more than a shell game in which the losers are Texas homeowners. "

" The fact of the matter is there ought to be reductions in rates because

there are significant reductions in coverage, " said Texas Watch executive

director Dan Lambe.

Gov. Rick held a news conference Friday to tout the plan as a way to

lower home owner insurance rates and increase consumer choice.

He began discussing the issue publicly last month, noting that insurance

premiums were increasing from 14 percent to 200 percent for Texas

homeowners.

In addition to the rising prices, two of the big three insurance companies

have stopped offering comprehensive coverage for new customers, and the

third has stopped offering it for new or existing customers.

While the insurance department said some State Farm Lloyds customers could

see their rates drop as much as 40 percent, State Farm said only that some

policyholders will see a premium reduction.

Others, the company said, will experience an increase in their annual

premiums because of rate increases implemented in November 2001 and February

2002 that may not yet have been added to their policies.

The new Texas policy is the same policy State Farm offers to homeowners

nationwide.

Lambe said Texas homeowners do not have the same needs as someone who lives

in New York City or Seattle.

The old policy addressed those needs by providing for things such as gun

collections and water damage, he said.

" As much as we'd like to think that we need an insurance policy that's

unique to Texas, the fact of the matter is that the state's existing policy

provides insurance coverage for items that in almost every other state are

considered a property owner's maintenance responsibility, " Ron Dodd, senior

vice president of State Farm in Texas, said.

Existing State Farm homeowners insurance policyholders will begin receiving

notices in July that the new policy will be implemented starting with Sept.

1 renewals.