State Senate OKs Senate Bill 1763 mold insurance bill

[Guest guest]

State Senate OKs mold insurance bill

The state Senate has approved a controversial mold insurance bill, sparking

renewed warnings from insurers that the legislation could make insurance

scarcer and more expensive.

Senate Bill 1763, written by state Sen. Deborah Ortiz, a Sacramento

Democrat, would prevent insurers from excluding mold losses when such claims

are triggered by a covered peril -- such as a fire or heavy water damage. It

passed the state Senate Thursday by a vote of 21-11.

The bill would require property or liability insurance policies issued or

renewed on or after Jan. 1, 2003, to cover mold as an " ensuing loss. "

The Assembly hasn't voted on the bill.

Mold is considered to be a burgeoning liability problem and potential health

hazard, although much of the problem remains poorly understood. Insurers hit

with multimillion-dollar bills for bad-faith claims and damages have tried

to reduce their exposure to the risk.

" It is a disappointment that the Senate approved a bill which could worsen

the already troubled marketplace for homeowner's insurers, " said Sam Sorich,

general counsel and senior vice president in Sacramento of the National

Association of Independent Insurers. " With no ability to limit the clean-up

or investigation costs involving mold claims, insurance companies can't

predict their losses, which may make it more difficult for them to stay in

the market. "

The association, based in Chicago, represents more than 690 member companies

writing $98 billion in premium annually.

For an earlier, more comprehensive news article on the bill, go to

http://sacramento.bizjournals.com/sacramento/stories/2002/04/22/story1.html.