Louisiana: State Farm's Mold Notice ?Misleading'

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

The company notice said, "Effective with this renewal, a fungus (including mold) exclusion endorsement will become part of your policy. This change eliminates coverage for any type of fungus including mold."

As in most other states, Louisiana regulators said, carriers aren't required to pay for mold claims associated with slow leaks caused by home maintenance problems-they also don't have to pay for mold testing and remediation.

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

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

Jim Donelon, Louisiana chief deputy commissioner of insurance, said he personally became aware of the State Farm notice situation when his mother got the notification from State Farm last week. "When I read it I felt it was incorrect," he said.

"And I brought it to my office because it was so wrong on its face. Others in the insurance department were also becoming aware of it around that time as well.

The department certainly needs to discuss the matter with the insurer, Mr. Donelon said. Asked if the notice could discourage some homeowners from renewing their policies, he said he hoped that is not the case.

Although mold claims are still relatively new for insurers, the insurance industry has been seeing an increasing number of claims over the past few years, with some insureds arguing that mold can cause a number of health problems, including breathing difficulties, headaches and severe allergic reactions and even neurological damage.

Mr. Wooley said he has called for a meeting with State Farm officials to discuss the matter.

"I have scheduled a meeting with State Farm executives later this month to sort out any confusion," he said. "But policyholders need to be aware that there is no blanket exclusion for mold coverage in Louisiana."

Kip Diggs, corporate spokesperson for State Farm, said the two sides are currently working out the details of the meeting.

"It appears there is a disconnect and misunderstanding here, and we hope to meet with Louisiana's insurance commissioner soon to discuss the issue," Mr. Diggs said.

"We are moving to exclude all mold from the policy. And that, apparently, is where the problem lies and it will be the focus of our meeting. It is a situation where we have a difference of opinion and we need to work it out," he said.