NJ DOBI Issues Mold/Fungus Exclusion Guidelines

The New Jersey Department of Banking and Insurance (DOBI) has issued guidelines for authorized companies concerning exclusions on “Mold/Fungus Coverage for Personal and Commercial Lines.”

Commissioner Holly C. Bakke indicated that the DOBI’s Office of Property and Casualty “is currently engaged in the process of approving limitations of coverage in property and liability filings under Insurance Service Office (“ISO”).”

ISO Members are covered by the following Guidelines:

Coverage should be offered at $10,000, on an aggregate basis, with optional increased limits of $25,000, and $50,000 made available. The $10,000 annual aggregate coverage should include loss to property caused by mold, “fungi”, wet or dry rot or bacteria, the cost to remove “fungi”, wet or dry rot, or bacteria from property covered under Section 1, the cost to tear out and replace any part of the building or other covered property as needed to gain access to the “fungi”, wet or dry rot, or bacteria; and, the cost of testing of air or property to confirm the absence, presence or level of “fungi”, wet or dry rot, or bacteria. Coverage should apply only if such mold loss results from a “Peril Insured Against” that occurs during the policy period. The limitation does not apply to losses due to fire and lightning.

Liability coverage should apply, up to at least $50,000, on an aggregate basis, for the total of all damages arising directly or indirectly, in whole or in part, out of the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of any mold, “fungi”, wet or dry rot, or bacteria. Increased limits up to $100,000 should be available, when requested by the insured.

The bulletin indicated that “For companies that do not belong to ISO, the Department will entertain options to purchase higher liability limits. Companies with more restrictive exclusions than ISO will be reviewed on a case by case basis.