Maryland Insurance Commissioner Steven Larsen announced that insurance companies may not exclude coverage for liability arising out of toxic mold in either Personal or Commercial lines Liability Coverage; however, the announcement indicated that “they may limit coverage for liability stemming from mold at $50,000.”
In addition, the decision states that in both commercial and personal lines property coverage, a policy “may limit loss from mold or remediation in which the ‘proximate cause of loss is a peril that is a covered loss’ (water damage as a covered loss, as an example). The minimum aggregate for mold and remediation coverage is $15,000 and may include Loss of Use or BusinessIncome/Extra Expense coverage.”
The decision follows a hearing on mold in November. The full text may be read on the Maryland Insurance Administration Web site: www.mdinsurance.state.md.us.
Other provisions included provisions governing the time for filing claims, specifying that “the policy may not unreasonably restrict the time period for reporting a mold claim, meaning it may not require a mold claim to be filed within a specified number of days following the covered loss nor may policy language require a loss due to mold to be reported during the policy period in which the original covered loss occurred.”
“While mold has become a problem in some other states, such as Texas, there is little evidence it is a problem for insurers here in Maryland,” Larsen stated. “This decision achieves a middle ground by not permitting insurers to completely exclude coverage for mold, but they have the ability to cap the exposure. I must balance the responsibility to encourage and maintain a viable insurance market against potential damage to consumers that would result from reduction or elimination of insurance coverage for mold.”
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