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Insurance commissioner OKs exclusion of mold claims
ASSOCIATED PRESS
July 14, 2003
BALTIMORE -- Insurers can exclude mold damage claims from their policies,
the state's insurance commissioner ruled.
The decision by Alfred W. Redmer Jr., the state's new insurance
commissioner, reversed a March ruling by then-Commissioner Steven B. Larsen.
Mr. Larsen ruled that insurers could not deny mold coverage, but said
payouts could be limited to $15,000 for removal and $50,000 for liability.
The ruling was the first major decision by Mr. Redmer, a former state
delegate who took over last month after being appointed by Gov. Robert L.
Ehrlich Jr.
"I just have a different opinion," Mr. Redmer said Wednesday.
At least 38 other states that have recently allowed the exclusion of
mold coverage. Mold claims have sharply increased while insurers' income
from stock market investments has been in decline, industry analysts say.
The industry has responded by increasing premiums and limiting mold
coverage, where possible.
A lack of awareness about the need to rid their homes of moisture has
allowed toxic mold to grow unchecked in some cases, and in other cases
contractors are charging too much to remove mold that does not pose a
threat, insurance experts say.
The Maryland Insurance Administration held a hearing on the mold
issue in November after receiving more than 300 requests from insurance
companies to limit or exclude mold coverage in this state.
Critics say denying coverage will hurt consumers by eliminating
protection for a wide variety of water-related damage claims. They also
argue that it will raise costs for homeowners who want insurance protection
from mold troubles.
Mr. Redmer said requests from the industry and concerns from
consumers who could not secure coverage because their homes face high
water-damage risks prompted him to make the decision. He said Maryland law
does not allow his office to force insurers to cover mold.
"It was my opinion that I don't have the authority to mandate what is
covered," he said. "That authority rests only with the Maryland General
Assembly."
Insurers must petition the insurance administration for formal
authorization if they decide to issue new policies excluding mold coverage.
Homeowners who are now covered must be notified of the policy change when
their policies are renewed, Mr. Redmer said.
Jim Caffey, executive vice president for the Maryland Multi-Housing
Association Inc., which represents rental residential properties in the
state, said he was disappointed by the decision.
"I'm worried that my members are not going to be able to find mold
liability coverage for a good price," Mr. Caffey said. "And when they do
find it, it's going to be more expensive."
The commissioner predicted that the marketplace will provide coverage
for those who want it.
"Some insurers will decide to offer this coverage and some insurers
will decide to exclude this coverage," Mr. Redmer wrote in his order. "Based
upon those decisions, insurers will price their products accordingly.
Policyholders are then free to decide which insurer's product best meets the
policyholder's needs."
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