Insurance companies worried about profits and losses

They say the fungus causes health problems. Insurance companies say covering mold claims would make rates rise again since they couldn’t make much profits.

8/20/02

Temple Terrace, FL – Staffers for Florida Insurance Commissioner Tom Gallagher came to the Tampa Bay area Monday to hear homeowners and insurance officials complain about a burgeoning problem with toxic mold in homes and businesses.

Among the 150 people who crowded into the Temple Terrace City Council chambers was Tom Gallagher, a 65-year-old retired New York fireman and no relation to the insurance commissioner of the same name.

Now living in Flagler Beach, Gallagher said his air-conditioning ducts are infested with mold, producing an odor so foul it drives him from his home at night. He blames it for the onset of emphysema.

“I can’t afford to buy another house at this stage in my life,” he said. “And nobody will buy my home” because of the mold.

Alison Ballentine, a neighbor of Gallagher’s, spoke of severe chest pains at night and showed photos of water damage under the crawl space of her home.

Both she and Gallagher say their mold claims have been rejected by their insurer.

Insurance carriers in the state, already faced with hurricanes and sinkholes, are moving quickly to address problems presented by toxic mold, a microscopic-size fungus.

More than 430 insurance companies are lobbying the Florida Department of Insurance to limit mold damage coverage, or to exclude such claims in homes and commercial buildings.

Toxic mold often looks like a black or gray sooty patch that grows over time, hidden within the walls and floors. Most susceptible are states in a warm, wet climate, such as Florida and Texas.

Top insurers such as State Farm and Allstate cite a rising number of mold claims in their push for double-digit increases in homeowners’ premiums.

Vince Rio of State Farm Insurance, Florida’s largest homeowners insurer, said policyholders misunderstand the issue on several fronts.

They don’t realize that there are different types of mold, some more troublesome than others, and that their policies don’t cover most mold claims.

“There is a misconception we are selling an all-perils policy,” Rio said.

Craig Duncan, a State Farm agent from Clearwater, brought dozens of supporters to suggest the state make mold coverage an optional addition to a standard homeowners policy, rather than make it mandatory.

Duncan said that mandating more types of health coverage has made health insurance unaffordable for many.

“Let’s not make the same mistake for homeowners,” he said.

The insurance commissioner has several options, none without complications:

If he exempts insurance companies from mold claims, or severely limits liability, homeowners could be stuck with thousands of dollars in medical bills and home repairs.

If he limits the amount insurance companies will pay for mold claims, perhaps with a $10,000 cap, hard-hit homeowners and businesses will struggle to pay over-the-cap costs.

If he forces insurance agencies to pay mold claims, some insurers say they will be forced to dramatically raise premiums or stop writing policies in Florida.

Insurance officials say mold claims in Texas helped give that state the distinction of having the country’s highest homeowners insurance rates.

Monday’s session was the insurance department’s third attempt to draw public input, following hearings in Miami and Orlando.

Steve Roddenberry, panel chairman and a deputy director with the insurance department, said another hearing in Tallahassee may be added.

Gallagher is expected to act on the issue within 30 days, department spokeswoman Tami Torres said.