State Farm Retracts Louisiana Mold Notice

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NU Online News Service, Jan. 22, 9:45 a.m.EST?Louisiana's top insurance regulator announcedyesterday that State Farm Insurance had agreed to revise a customernotice concerning mold and fungus claims, which he denounced lastmonth as "misleading."

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Acting Commissioner of Insurance Robert Wooley said theBloomington, Ill. based firm had agreed to issue a clarificationafter he held two meetings with company officials.

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The new notice, to be mailed out by March 1, states that thecompany payment for repairs of damage from an accidental directphysical loss "will include the removal of mold or fungus on theitems damaged.

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"State Farm will not deny an otherwise covered claim due to thepresence of mold or fungus on items damaged by a covered loss," thenotice goes on to say.

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Mr. Wooley's meetings with the company came after the carriernotified renewal customers that its new Fungus ExclusionEndorsement eliminated coverage for all mold damage. State Farm,with 281,000 policyholders, is Louisiana's largest writer ofhomeowners insurance.

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A State Farm spokesperson said then that the issue was a"misunderstanding" that the carrier would try to work out.

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The company's original notice said, "Effective with thisrenewal, a fungus (including mold) exclusion endorsement willbecome part of your policy. This change eliminates coverage for anytype of fungus including mold."

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As in most other states, Louisiana regulators said, carriersaren't required to pay for mold claims associated with slow leakscaused by home maintenance problems. They also don't have to payfor mold testing and remediation.

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But the state does require insurance companies to cover molddamage resulting from a sudden or accidental covered event. "Theexpenses for repairing or replacing the damaged property, includingthe costs to disinfect mold, are covered," Mr. Wooley said.

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One example of a sudden and accidental covered event would be apipe that bursts within a wall because of freezing weather, causingwater damage that results in mold, he added.

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