The Alliance of American Insurers has urged the Missouri Department of Insurance not to issue a proposed bulletin that would require insurers to provide coverage for mold damage in personal lines policies.
“The Department of Insurance currently permits insurers to exclude mold coverage in personal lines policies, and 80 percent of policies issued have those exclusions,” Alliance Assistant VP and Southwest Region Manager Joe Woods said in a statement. “To reverse that position and require insurers to provide mold coverage would be not only a costly administrative nightmare, but also a sure-fire way to increase costs to policyholders.
“Whenever mold coverage is mandated, claims costs increase, and those costs are ultimately passed on to the consumer in the form of higher insurance costs.”
The mandate would not benefit consumers, argued Kirk Hansen, director of claims for the Alliance.
“Missouri should look at what happened in Texas to see how mold claims can impact homeowners rates and availability. It was tried in Texas with devastating results for consumers and the insurance industry. During the time mold coverage was mandated in Texas, the number of claims soared from just over 1,000 to nearly 15,000 and the average cost for that mold coverage grew from $23 a year per policyholder, to over $300 per year.
“In the face of escalating claims costs, the Texas Department of Insurance began approving mold exclusions, and now, the crisis is subsiding. The Texas experience should serve as a laboratory for Missouri and the rest of the nation.”
Was this article valuable?
Here are more articles you may enjoy.