Mold grows big bills for insurers: Revised policies to restrict coverage

[Guest guest]

http://seattletimes.nwsource.com/text/134517449_mold20.html

Tuesday, August 20, 2002, 12:38 a.m. Pacific

Mold grows big bills for insurers: Revised policies to restrict coverage

By Amy Trask

Seattle Times business reporter

After a jury walloped one insurance company with a $32 million verdict to

clean mold from a Texas woman's home, insurers throughout the country began

scrambling to rewrite their policies concerning the icky substance.

In Washington, the state's largest home insurers are rewording their

policies to explicitly state they will cover mold damage only when it's

caused by a covered problem, such as a major storm or a burst pipe.

The insurers say they never intended their policy to cover mold damage

caused by leaks, condensation, poor home maintenance or Seattle's rainy

weather.

Among the latest to adopt new language is Allstate, the state's

second-largest home insurer. In annual renewal letters, Allstate is telling

policy holders it will pay for mold damage only under specific

circumstances.

Allstate spokeswoman Darcy Olson said the language is a clarification, not a

policy change, to reinforce that insurance is to cover " sudden and

accidental loss. "

What is new, Olson said, is that Allstate will pay no more than $5,000 to

clean up mold, even when it is caused by a covered loss.

Karl Newman, the executive director of the Washington Insurance Council, a

local industry group, said Washington insurers have not been overrun with

mold claims.

" It's more of a cautionary measure at this time, " Newman said.

The state Insurance Commissioner's Office has approved 264 filings this year

from insurers who asked to change mold policies. The changes included

limiting coverage, amending wording and changing rates. Last year, 125

filings were approved. The department is reviewing 193 other filings.

Because of court rulings, Washington insurers can't eliminate mold coverage

entirely, office spokeswoman Marquis said. But they can limit how

much they will pay to clean up mold after a disaster. Insurers have proposed

limiting mold cleanup to $5,000, although some have set that cap as high as

$25,000.

If a company petitions the state's insurance commissioner to limit coverage,

it must also present an argument to justify how much it charges.

" If there's anything that is a reduction in service, we want to see a rate

filing to make sure the consumer is getting charged a fair rate, " Marquis

said.

Cleaning up mold can be expensive. The average claim was about $35,000,

according to the Insurance Information Institute, an industry-sponsored

research group. In all, insurers paid $1.3 billion last year to settle mold

claims.

That number has grown exponentially, considering that mold was essentially

off insurers' radar screens two years ago.

For example, in 1999, Farmers Insurance, which insures about 13 percent of

Washington homeowners, saw so few mold-damage claims that it didn't even

track them, said spokeswoman Flynn. In 2000, the company saw about 500

nationwide. By 2001, there were about 13,000 - 11,000 in Texas alone.

Although insurers or state insurance regulators do not have statistics on

how many mold claims have been filed in Washington or how much was paid out,

experts say any of those numbers would be dwarfed by claims in Texas, which

an industry-funded research group estimates accounted for 70 percent of the

mold claims filed last year.

Industry watchers in Washington say mold is a concern here, but much less so

than in Texas or California. Only 23 of the 5,000 complaints received by the

state insurance commissioner this year concerned mold damage.

Pemco, a Seattle-based insurer that insures homeowners only in Washington,

saw two mold claims last year; in both cases, the culprit was burst water

pipes, said spokesman Jon Osterberg.

Mold-related insurance claims, media attention and lawsuits have been

concentrated in the past year in sun-drenched Texas, Florida and California.

" The development of most of the insurance claims has nothing to do with

climate, " said Hartwig, chief economist of the Insurance Information

Institute.

Many of the mold claims have been driven by attorneys and media coverage,

Hartwig said.

" There's no meteorologic danger there, although you'd swear otherwise, "

Hartwig said. " Mold has not become more virulent or simply been unleashed

recently. "

Homebuilders and contractors are worried mold could be the next asbestos, as

homeowners and condo owners are bringing lawsuits claiming that defective

construction caused mold to grow, even in new homes, said Tom McCabe, a vice

president at the Building Industry Association of Washington.

New homes built to be more energy-efficient will likely need ventilation

systems, McCabe said.

" Because of energy code, new houses are built to be very tight - the windows

are thicker, the door is thicker, house is sealed very tight, " McCabe said.

" When it's sealed up that tight, it can and does create mold problems. "

To control mold, insurers say, check for leaks in pipes and appliance hoses,

control standing water in plants and gutters and cut humidity with air

conditioners, fans or dehumidifiers.

Amy Trask: 206-464-2032 or atrask@...

[Guest guest]

Is there anyone else getting ticked off by all the press of the West Nile

Virus?

I sit in my bed dying from it and all I can think about is if they put this

much in toxic mold, would I be lying here with brain inflammatory, asthma,

bloody stools, another sinus infection, another bronchio-pnemunia bout, plus

more medical problems with me, my kids and animals. All the while drinking

espresso just to wake up! With NOT ONE DOCTOR who doesn't want money upfront

in order to help us! I am a born American who feels like the government and

the doctors have turned their backs on all of us.

I am one who can understand the frustrations of someone going " postal " on the

system!

kathy- in illinois