Mold Legislation Continues Growth in State Legislatures

March 24, 2003

State lawmakers around the country have been busy introducing a variety of bills aimed at the issue of mold, how it is addressed by society, and how it is covered by insurers’.

“We are currently tracking nearly 30 bills under consideration in 14 states,” Kirk Hansen, the director of claims for the Alliance of American Insurers, commented.

“Fortunately, many state lawmakers and regulators wisely permitted insurers to exclude mold coverage or to place limits on coverage,”; Hansen said.” So far, 39 states and the District of Columbia have approved limitations on homeowners policies.

What we’re seeing this year is an effort by some lawmakers to require studies that determine acceptable exposure limits for mold or set air quality standards. The Alliance believes that it is premature to establish standards at this time since the science of how mold affects individuals is not well developed.”

Hansen said two particularly troublesome bills, in California and Nevada, could mandate coverage for mold and adversely impact the price consumers pay for insurance.

“California has a couple bills dealing with mold – one is SB 31 (that
deals with requirements for home inspectors), but the one of more concern is SB 850 (that allows the insurance commissioner to disapprove, deny, or disallow a policy form or certificate, policy change, or policy exclusion filed with the Department by an insurer, or withdraw any previous approval, if the policy form or certificate, policy change, or exclusion is likely to contribute to a significant health risk or to a property being in an uninhabitable condition.) The bill makes no mention of the word mold, but it seems that mold could possibly come in to play if the bill was enacted.

“If that’s the case, under this law, policy forms the commissioner has
already approved could be disallowed further down the road. This is a unique bill we have never seen the likes of before. This is a brand new bill and it is potentially viable. It has not yet been debated. The alliance is certainly going to object it.”

As for Nevada, Hansen noted that the mold bill there would require insurers to disclose coverage for the control of mold in property insurance.

“It also requires insurers offer coverage for mold in various amounts,”
Hansen commented.” I think Texas serves as an example why it’s a bad idea to mandate coverage for mold since the situation had a catastrophic effect on rates. If insurers are not allowed to limit coverage or offer coverage as they see fit, some insurers may be forced to leave the marketplace. If coverage is mandated, it can only have a negative affect on the marketplace and availability of coverage for consumers. This is also a new filing and it has potential viability.
If it moves, it would be this spring.”

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