NAII Warns Fla. Department of Mold Threat

During the first of three public hearings held by Florida Insurance Commissioner Tom Gallagher on mold, the National Association of Independent Insurers (NAII) encouraged the state insurance department to continue collecting information through public hearings to avert a homeowners crisis similar to those in Texas and California.

NAII southeast regional manager James Taylor expressed his association’s full support of the insurance commissioner’s efforts to learn more about the issue.

“These factors make it extremely difficult to set exposure limits that have relevance for the general public,” Taylor commented. “As a result of all the conflicting information regarding the effects and the clean up of mold, these claims provide fertile ground for fraud and unnecessary lawsuits. These side effects dramatically drive up the frequency and severity of water-damage claims and ultimately force premiums to increase.”

In Texas, where the mold issue has spurred a crisis in the homeowners insurance market, the state-mandated policy form was so broad that it essentially turned the insurance contract into a homeowner’s maintenance contract.

“The surge of claims and skyrocketing costs, coupled with the state’s regulatory environment, crippled a once competitive marketplace and forced premiums to go through the roof. It is important that in Florida we take the proper steps to prevent this type of market problem,” Taylor said.

On the other hand, NAII points to Arkansas as a state that has taken a reasonable approach to the mold issue.

In April the Arkansas Insurance Department issued a bulletin that continues to allow insurers to use policies and endorsements that exclude coverage for mold if the exclusion is directed at precluding coverage for remedial costs or mold that is not the result of a covered cause of loss.