Maryland Bans Mold Exclusions, Sets Sublimits

"Hopefully this will keep Maryland from experiencing what other states such as Texas have gone through," said. "It will allow predictability, and whatever is covered will be reflected in the rates," said Mr. Golden.

State Insurance Commissioner Steven B. Larsen made the decision against permitting a total mold exclusion on any personal or commercial lines policies in Maryland. Since 2001, the state has received approximately 300 policy language filings from insurers on mold damage.

While banning a total exclusion, Maryland will allow insurers to limit mold-related liability claims to $50,000 and mold-related property damage claims to $15,000. Also, an additional deductible for mold is prohibited.

The Maryland announcement said insurance policies cannot unreasonably restrict the time period for reporting a mold claim. The claim cannot be required to be filed within a specified number of days following a covered loss, and need not be reported during the policy period in which the original loss occurred.

"This decision achieves a middle ground by not permitting insurers to completely exclude coverage for mold, but they have the ability to cap the exposure," Commissioner Larsen said in a statement. "I must balance the responsibility to encourage and maintain a viable insurance market against potential damage to consumers that would result from reduction or elimination of insurance coverage for mold."

Mr. Golden at NAII noted there are similar insurance department rules in Alabama, Connecticut, New Jersey, Rhode Island, Texas, Vermont, and Wisconsin.