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Mold May Soon Be Excluded From Insurance Coverage

LOS ANGELES-Insurance companies are refusing to write policies on commercial buildings and homes if prior water damage claims have been made or if inspections turn up the potential for mold problems, according to Jenny Jones, president and CEO of Elkins/Jones, a leading property insurance brokerage firm.

By Peter Landau | Updated on March 06, 2002

LOS ANGELES-Responding to a rising tide of mold-related claims and lawsuits, insurance companies are refusing to write policies on homes and commercial buildings if prior water damage claims have been made or if inspections turn up the potential for mold problems, according to Jenny Jones, president and CEO of Elkins/Jones, a leading property insurance brokerage firm. In addition, insurance companies are implementing non-renew policies for clients with prior water damage activity.

California closely follows Texas in mold-related claims, according to the Insurance Information Institute, and last year a jury awarded $18.5 million in damages to a California homeowner, of which $18 million was punitive damages. In another highly publicized case in Texas, a homeowner received $32 million.

If current trends continue, and a mold exclusion is not passed by the Department of Insurance, major insurance companies may consider not selling new homeowner policies in California as they already have in Texas because of the substantial number of mold-related claims that have been made in that state, according to Elkins/Jones. This could have a disastrous affect on the California economy and the livelihoods of homebuilders, realtors, escrow companies and others.

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