Some insurance policies exclude mold

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Some insurance policies exclude mold

By: Simonson April 24, 2002

After hearing rumors about mold growing in his neighbors' houses, Gerry

Wyatt decided to check his own for mold just before his one-year home

warranty expired.

After finding it growing in the basement of his new $420,000 home in Castle

Pines, he contacted the builder, Village Homes, and arranged to have it

cleaned up under the warranty.

If he had not caught the problem in time, Wyatt said his other option would

be to claim it on his homeowners' insurance.

Because mold claims are increasing nationwide, many insurance companies are

excluding mold from policies, leaving those without a warranty to clean up

the situation on their own.

Insurance agents in Texas and California have seen the biggest increase in

mold claims. The impact of mold in the two states has forced many insurance

companies to double or triple the amount of their premiums, eliminate mold

from their coverage policy and, in some cases, stop selling homeowners'

insurance all together, said Tom Bonnot, branch claim manager for American

Family Insurance.

The mold that has caused so much havoc for insurance agents elsewhere is

just starting to seep into Colorado houses, said McGarvey, account

representative for Corporate Housing Services, a company that temporarily

houses policy holders who have damage to their houses.

Though nothing like California or Texas, McGarvey has seen mold claims in

the Denver area, including Highlands Ranch and , she said.

American Family Insurance has had a slight increase in claims during the

year, but its policies generally do not cover mold, Bonnot said.

State Farm Insurance recently sent a letter to its policyholders explaining

that mold was no longer covered under the homeowners' insurance. McGarvey

received a similar letter from Allstate Insurance.

State Farm never intended to cover mold claims, said spokesperson

.

" The letter was a clarification for our policy holders so they understand

their coverage before something happens instead of afterward, " she said.

Because State Farm just started tracking mold claims, said she does

not know if they are increasing in Colorado.

The Rocky Mountain Insurance Information Association has not had a

significant number of mold claims, but they are on the rise, said executive

director Carole .

" What we have seen is an increase in more insurance companies having

exclusions for mold, " said.

Unlike a tornado or fire, mold is preventable, which is the reason why State

Farm and American Family do not cover it in its policies, said both Bonnot

and .

Homeowners can take steps to prevent mold, such as ventilating crawl spaces

and attics, installing fans in bathrooms and repairing leaky plumbing,

Bonnot said.

" It takes years and years for mold to develop, and in that time homeowners

can use preventative measures to ensure it does not develop, " he said.

Wyatt thinks that line of reasoning is an excuse for insurance companies to

get out of paying what they should, he said.

His house was less than a year old when he discovered mold. It originated in

the basement, where many new cases of mold in the Denver area are found.

The main reason mold is increasing is because homebuilders have begun

designing homes with wood floors above expansive soils, said Brice ,

Tri-County Health Department's director of environmental health.

If water gets into the crawl space beneath the floor and remains for more

than 48 hours without proper ventilation, mold is likely to grow. With

houses becoming increasingly air tight, mold spores do not have leaks and

cracks to escape from, leaving them to circulate through the house.

Insurance companies covering mold claims would be a greater expense to the

consumer than those who do not, Bonnot said.

If consumers want reasonable insurance rates, companies cannot cover

anything preventable, such as mold, Bonnot said.

" The consumer wants to be paid for everything, but wants reasonable rates, "

he said. " If we start adding mold to our coverage we will be insuring

everything there ever was, and that will be a very expensive policy. "

© County News-Press 2002