Regulating Mold Claims State by State - Filings for Exclusions and Limited Coverage of Mold/Fungi Are On the Rise
October, 2002
The increased claims of mold contamination discovered in residential and commercial property has spawned a flurry of activity in state departments of insurance around the country. A recent rash of federal and state legislation introduced and passed in response to the mold claims has caused many state insurance commissioners to react and formulate plans of action. Recently, when the Arkansas Department of Insurance posed three questions to members of the National Association of Insurance Commissioners, there were mixed and varied responses. Each of the state insurance commissioners was asked to provide answers to the following:
- Has your state received any filings for mold/fungi exclusions?
- Any filings to provide limited coverage?
- What is your Department’s position on mold/fungi?
Though some states appear to be more aggressive than others in responding to the mold contamination epidemic, state departments of insurance perceive claims of mold contamination to be pressing and durable.
The following represents the myriad of responses made to the three questions posed by Arkansas State Insurance Commissioner Bill Lacy.
ALASKA State Insurance Commissioner - Sarah McNair
At this stage, the Alaska Department of Insurance has received several exclusion filings concerning mold/fungi.
The state agency acknowledges that ISO has already made filings to provide limited coverage. Additional companies may have made similar filings, but generally the filings are for complete exclusions.
The Alaska Department of Insurance is still reviewing the filings and continues to request more information on mold/fungi exposure in Alaska. Alaska already relies upon a state statute, AS 21.36.212, which prohibits an insurer from denying a claim if the denial is based upon an excluded risk in the chain of causes but operates on a secondary basis. As it stands now, if the mold/fungi claim results from covered water damage, then it cannot be excluded. The Alaska Department of Insurance is still reviewing and evaluating the liability exclusions.
ALABAMA State Insurance Commissioner - J. Johnson
The Alabama Department of Insurance has always covered mold/fungi claims subsequent to a covered peril. The state agency currently allows exclusions for any other type of mold/fungi claim, provided that when there is a coverage reduction, there must be a commensurate reduction in rate. Many times, this request prompts the typical response from the insurance industry; insurance carriers complain that there was no original contemplation of coverage. Therefore, the Alabama Department of Insurance will not ask the insurance carriers to reduce their rates if they can demonstrate the loss ratios would support a rate increase.
ARKANSAS State Insurance Commissioner - Bill Lacy
The Arkansas Department of Insurance is currently evaluating the mold/fungi problem.
AMERICAN SAMOA
No information was available.
ARIZONA State Insurance Commissioner - Dean Ehler
The Arizona Department of Insurance has received filings for mold/fungi exclusions.
The state agency has not received any filings to provide limited coverage.
The Arizona Department of Insurance’s position is clear - if the form or exclusion is not ambiguous, misleading, or deceptive, the agency will approve the filings.
CALIFORNIA State Insurance Commissioner - Maureen Mason
The California Department of Insurance has received numerous filings requesting exclusions for mold coverage.
Two groups representing companies have submitted filings to the agency, both of which offer limited coverage capped at $2500 - $5000.
California has not found any statutory authority to require specific coverage for mold. The California Department of Insurance does have authority to review the rating impact of these requests for coverage change. Therefore, once a company provides satisfactory information relating to consideration of the rating implications of removing this coverage, the state agency will then approve such filings.
COLORADO State Insurance Commissioner - Stephanie Paswaters
The Colorado Department of Insurance has not received any filings regarding mold/fungi because companies are not required to file the forms in Colorado for homeowners and commercial property. In Colorado, liability coverage is approved as “certify only.” The Colorado Department of insurance would not know of exclusions or limited coverage.
As for the agency’s position, this very issue was raised at a previous Issues meeting last year. The Colorado Department of Insurance does not have a position because the state agency plays no role in approving the filings. Colorado does not currently have any laws in place for coverage of mold. Unless the agency begins to receive complaints or inquiries, the mold/fungi problem will continue to be a non-issue in Colorado. In fact, mold/fungi is not normally a problem in Colorado.
CONNECTICUT State Insurance Commissioner - Walter Bell
The Connecticut Department of Insurance has received filings for mold/fungi exclusions.
A good number of these filings provide limited coverage.
Currently, the filings are under review with the agency. No final decision has been made regarding coverage for mold at this time.
DISTRICT OF COLUMBIA
No information was available concerning mold/fungi exclusions.
DELAWARE State Insurance Commissioner - Ann Lyon
The Delaware Department of Insurance has received filings for mold/fungi exclusions.
Some of the filings do provide limited coverage.
The state agency has decided to put all filings dealing with the issue on hold until the United States Congress makes a decision concerning mold contamination.
FLORIDA State Insurance Commissioner - Steve Roddenberry
The Florida Department of Insurance has received filings for mold/fungi exclusions.
Some filings have provided limited coverage.
The state agency is not favorably entertaining the filings. Many companies have withdrawn their filings contingent upon the Florida Department of Insurance devising a plan with ISO. Other companies have waived the deemer provision under Florida law until the Florida Department of Insurance reaches a mutual decision with ISO.
GEORGIA State Insurance Commissioner - Greg Hawkins
The Georgia Department of Insurance has received filings for mold/fungi exclusions.
Some of these filings have provided limited coverage.
The state agency is currently evaluating the filings and currently has taken no position on the issue.
GUAM
No information was available.
HAWAII State Insurance Commissioner - Shelley Santo
The Hawaii Department of Insurance has received the ISO Homeowners 2000 form filing. The state agency has suspended the filing for reasons unrelated to the new mold/fungi exclusion.
Several insurance carriers have filed new mold/fungi exclusions and received approval.
IDAHO State Insurance Commissioner - Donna Daniel
The Idaho Department of Insurance has received and accepted many filings for mold/fungi exclusions on a “file and use basis.”
ILLINOIS
No information was available.
INDIANA State Insurance Commissioner - Keith Kendall
The Indiana Department of Insurance has received various filings excluding or restricting losses caused by mold/fungi.
Currently, the state agency is accepting these filings with reservation. No Indiana statute addresses this type of exclusion.
The state agency is considering taking similar actions as the Texas Department of Insurance. The Indiana Department of Insurance is considering distributing a bulletin expressing Commissioner Kendall’s wishes.
IOWA State Insurance Commissioner - Angela Burke Boston
The Iowa Department of Insurance has received filings for mold/fungi exclusions.
Some of the filings received by the agency provided limited coverage for mold/fungi.
The Iowa Department of Insurance has approved such filings for use in the state.
KANSAS State Insurance Commissioner - Bill Wempe
The Kansas Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
At the request of Commissioner Wempe, the state agency is holding all such filings in abeyance and not taking any action on them until the Commissioner advises the Kansas Department of Insurance to do so. No position on what steps to take from here has been established by the state agency.
KENTUCKY State Insurance Commissioner - Robin Coombs
The Kentucky Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
The state agency is approving these filings as long as the language does not contain any inconsistent, ambiguous, or misleading clauses which deceptively affect the risk purported to be assumed in the general coverage of the contract. KR304.20-130
LOUISIANA
No information was available.
MASSACHUSETTS
No information was available.
MARYLAND
No information was available.
MAINE
No information was available.
MICHIGAN State Insurance Commissioner - Kathleen Parsons
The Michigan Department of Insurance’s position is that these types of forms are exempt from filing in Michigan. No position has yet been taken on mold/fungi.
MINNESOTA
No information was available.
MISSOURI
No information was available.
MISSISSIPPI State Insurance Commissioner - Nellie Mitchell
The Mississippi Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
A final decision on the filings by the agency is still pending.
MONTANA State Insurance Commissioner - Mari Gray
The Montana Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
The state agency has taken no position on the matter. The Montana Department of Insurance approves such filings if they meet the requirements of the code. At this time, there are no Montana laws prohibiting such exclusions.
NORTH CAROLINA State Insurance Commissioner - Helen Best
The North Carolina Department of Insurance has received filings for both commercial and personal mold/fungi exclusions.
The North Carolina Rate Bureau (which oversees personal lines filing) has filed, but not yet approved, a mold/fungi endorsement with limits the coverage up to $5000.
Mold/fungi exclusions are not an issue as long as the filings meet statutory requirements and rate consideration is given, if any.
NORTH DAKOTA State Insurance Commissioner - Larry Maslowski
The North Dakota Department of Insurance has received approximately 15 - 20 mold/fungi-related filings. Some filings are simply clarifications that mold/fungi are excluded.
In North Dakota, standard property policies have always had exclusions for mold/fungi, so that has not been an issue. However, the state agency is also receiving filings that expand mold/fungi exclusions to include bacteria and viruses. The state agency has not yet determined its official response to this new phenomenon. The North Dakota Department of Insurance’s final decision depends on, among other things, the federal government’s response to terrorism coverage.
NEBRASKA
No information was available.
NEW HAMPSHIRE State Insurance Commissioner - Dennis C. Lamy
The New Hampshire Department of Insurance has received filings for mold/fungi exclusions, but has not yet received any filings for limited coverage for mold/fungi.
The state agency is in the process of developing their position concerning this matter.
NEW JERSEY
No information was available.
NEW MEXICO
No information was available.
NEVADA State Insurance Commissioner - Cliff King
The Nevada Department of Insurance has received filings for mold/fungi exclusions, but has not received any filings for limited coverage for mold/fungi.
The state agency has approved each of the filings.
NEW YORK
No information was available.
OHIO State Insurance Commissioner - John Pedrick
The Ohio Department of Insurance has received filings that both exclude mold/fungi and provide lower limits for coverage. Ohio law does not prevent these exclusions, so the state agency has permitted them.
OKLAHOMA State Insurance Commissioner - Kathie Stepp
The Oklahoma Department of Insurance has received filings for mold/fungi exclusions, but has not received any filings for limited coverage for mold/fungi.
The state agency has approved each of the filings.
OREGON State Insurance Commissioner - Michael Lamb
The Oregon Department of Insurance has been inquiring about exclusions and rates, but has not had many requests for exclusions.
To date, if the insurance carrier answers the agency’s questions satisfactorily, the exclusion is approved. The state agency plans to revisit this issue in the near future.
PENNSYLVANIA State Insurance Commissioner - Randy Rohrbaugh
The Pennsylvania Department of Insurance has received filings for mold/fungi exclusions, but has not received any filings for limited coverage for mold/fungi.
The state agency will allow exclusions on new business only for personal policies and new/renewal business on commercial policies.
PUERTO RICO
No information was available.
RHODE ISLAND State Insurance Commissioner - Paula Pallozzi
The Rhode Island Department of Insurance has received filings for mold/fungi exclusions.
Until such time as a formal position is taken, the state agency is asking insurers to withdraw such exclusions at this time.
SOUTH CAROLINA State Insurance Commissioner - Dean Kruger
The South Carolina Department of Insurance has received many filings
for mold/fungi and has approved these filings. The state agency feels that South Carolina law provides that such coverage is mandatory absent an exclusion.
SOUTH DAKOTA State Insurance Commissioner - Vicki V. Rivenes
The South Dakota Department of Insurance has received several filings for mold/fungi exclusions. Most of them totally exclude mold/fungi no matter what the cause. Commissioner Rivenes noted that the state agency has received filings for endorsements that limit coverage for mold/fungi.
At this time, the South Dakota Department of Insurance is holding these filings until such time as the Commissioner makes a determination. The state agency, however, is approving the endorsements.
TENNESSEE State Insurance Commissioner - Coit Holbrook
The Tennessee Department of Insurance has received filings for mold/fungi exclusions, but has not received any filings for limited coverage for mold/fungi so far.
The state agency has approved each of the filings.
TEXAS State Insurance Commissioner - Gary Julian
The Texas Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
The state agency has not approved any of these filings. Commissioner Julian recently announced his decision regarding mold/fungi coverage in the state-prescribed policy forms. The Commissioner’s Order and endorsements are available at the following website address www.tdi.state.tx.us.
UTAH
No information was available.
VIRGINIA State Insurance Commissioner - Rebecca Nichols
The Virginia Department of Insurance has received multiple filings for mold/fungi exclusions. Some of the filings offer limited coverage, some do not.
The Virginia Department of Insurance has adopted the following position: regarding commercial property, the state agency will allow mold/fungi exclusions provided there are exceptions to the exclusions to cover mold/fungi if it is an ensuing loss resulting from fire or lightening. For commercial liability, the state agency will allow mold/fungi exclusions. The state agency will not allow mold/fungi exclusions for homeowner’s liability. The provisions of Chapter 340 of Title 14 of the Virginia Administrative Code establish minimum standards for the content of homeowner’s policies. While mold/fungi is excluded as a direct cause of loss, it is not excluded as an ensuing loss resulting from a covered cause of loss. All ensuing loss resulting from covered causes of loss must be covered, which would include mold/fungi resulting from covered causes of loss.
For owner-occupied dwelling fire property coverage, mold/fungi exclusions are not permitted. The minimum standards mentioned for homeowner’s policies also apply to owner-occupied dwelling fire property policies. For personal liability other than homeowner’s liability, the agency allows mold/fungi exclusions.
VIRGIN ISLANDS
No information was available.
VERMONT
No information was available.
WASHINGTON State Insurance Commissioner - Terry Nordahl
The Washington Department of Insurance has received at least 100 filings for mold/fungi exclusions, as well as a couple filings for limited coverage for mold/fungi.
The state agency approves such filings depending upon the circumstances. If there was a prior exclusion and the new exclusion is a clarification, the state agency generally approves the new exclusion. If there was no prior exclusion, the state agency disapproves and asks for a rate filing to account for the reduction in coverage.
WISCONSIN
No information was available.
WEST VIRGINIA State Insurance Commissioner - John Mooney
The West Virginia Department of Insurance has received filings for mold/fungi exclusions, as well as filings for limited coverage for mold/fungi.
The state agency has approved some of these filings, but not all of them. The state agency continues to approve the filings as necessary.
WYOMING State Insurance Commissioner - Roy Lesh
The Wyoming Department of Insurance has received filings for mold/fungi exclusions. Limited coverage is being provided by ISO members and or/subscribers. The state agency is in contact with Allstate Insurance Company, Farmers Insurance Company, and State Farm Insurance Company to determine whether the insurance carriers would consider an optional endorsement.
Commissioner Lesh would be satisfied with an optional endorsement attaching a cap on damage control, among other items. •
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