Texas Adopts ISO Form On Mold
By Mark E. Ruquet
NU Online News Service, July 24, 4:20 p.m. EST?The Texas Department of Insurance has adopted Insurance Services Organization form language for homeowners insurance that would restrict insurers' coverage when it comes to mold claims.
Under the ISO form, said Jose Montemayor, Texas insurance commissioner, in a written statement, insurers would be allowed to limit mold coverage, similar to what the department said was adopted last November for Texas Standard Policies.
In return for use of the form, insurers must show they are reducing premium rates to reflect the changes, the department said.
Homeowners should see premium reduction rates ranging between 8 percent and 39 percent for the basic HO-B policy, it is estimated.
Homeowners can purchase additional coverage for mold related risks. The department said it has approved six residential property policy forms and 93 endorsements.
Downers Grove, Ill., based Alliance of American Insurers applauded Mr. Montemayor's actions.
Rita Nowak, the Alliance's vice president of property-casualty, praised the commissioner for his decision, saying the move gives policyholders the opportunity to purchase the amount of coverage they can afford while protecting companies from open-ended claims.
The explosion in mold claims began last year after Farmers Insurance in Texas was hit with a $32 million judgment for contractual damages due to mold infestation.
Since then, insurers have sought to reduce their exposure to the risk.
Last week, the Minnesota Department of Commerce, which regulates insurance, rescinded a bulletin that ordered insurers not to exclude "mold" from its policies.
In a written statement, Jim Bernstein, Minnesota commerce commissioner, said the order was removed after a determination was made that proper procedures were not used in its adoption. However, he said, insurers had not shown the risk was causing insurers losses in the state. He indicated that the department would not allow approval of such exclusions unless companies show they are experiencing exceptional losses over the risk.
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