AAIS Endorsements Address Mold Claims

NU Online News Service, May 22, 11:48 a.m. EST?The American Association of Insurance Services said that the policy form language it has developed for insurers to use in excluding and limiting losses arising from mold has been done on a strictly advisory basis.

The Wheaton, Ill.-based AAIS develops policy forms used by more than 600 property-casualty insurers. Joe Harrington, a representative for the group, said the latest language is only advisory because many states have yet to come up with a regulatory scheme for mold damage detailing what policies can say about how much can be excluded and how much limited coverage must be provided.

"Really, there has to be a pretty clear consensus before we try a countrywide filing. We don't want to have to revise filings in a lot of states," he said.

AAIS said countrywide filing action is not anticipated until a full consensus of regulatory opinion emerges regarding mold exclusions and limitations.

Rising mold claims have been a subject of concern to insurers ever since a Texas jury delivered a $32 million award after a homeowner sued over mold damage. In the wake of that court action, some insurers stopped writing homeowners, while others instituted huge rate hikes.

AAIS last year developed mold exclusion and limitation endorsements for use with its homeowners and mobile-homeowners programs. AAIS noted that drawing on models developed for these two programs, it had recently released mold endorsements for its dwelling properties, farm properties, farm owners, personal and premises liability, personal umbrella, and farm umbrella programs.

The endorsements essentially provide two options for addressing damage or injury arising from mold.

? Option one is coverage exclusions. Property coverage exclusions include an exception (thereby establishing coverage) for mold damage arising from fire or lightning, including fire suppression. Liability exclusions include exceptions for bodily injury arising from food poisoning or from fungi harvested for human consumption (for example, mushrooms).

? Option two is limited coverage. Property endorsements provide coverage up to a $10,000 sublimit for mold-related damage caused by a covered peril. Liability endorsements provide coverage up to $50,000 per occurrence and on an annual aggregate basis.

(The limited liability coverage is not available for the umbrella programs; limited coverage should be provided in the underlying layers, AAIS said.)

More details on the AAIS mold endorsements are available in a report posted on its Web site, www.AAISonline.com, entitled, "Mold: Where is the exposure?"

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AAIS Endorsements Address Mold Claims

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