Ga. Approves Filing Guidelines for Mold Coverage

May 30, 2003

The Georgia Department of Insurance has released comprehensive mold endorsement filing guidelines, providing insurers long-awaited guidance on the minimum level of mold coverage required in homeowners and commercial lines policies. The American Insurance Association (AIA) was part of an industry group that negotiated the guidelines with state insurance regulators.

“With the increase in mold-related claims under both homeowners and commercial lines policies, insurers need direction from regulators regarding allowable mold coverage parameters in order to maintain a healthy insurance market in Georgia,” said Raymond Farmer, AIA assistant vice president, southeast region. “While the guidelines don’t provide carriers with as much flexibility as we had hoped for, they do clearly define the scope of mold coverage that Georgia will require.”

For homeowners policies, the new Georgia guidelines are comparable to pending ISO filings. The guidelines provide that mold damage ensuing from a covered peril is covered up to the policy limits. They also require a minimum level of remediation coverage (for example, for air sampling and testing expenses) when mold results from a sudden and accidental water loss, plus the option for consumers to buy additional remediation coverage. For commercial property and liability coverage, insurers wanted a greater range of coverage options than the Georgia guidelines allow, in light of the explosion in mold litigation, and the exorbitant costs involved in defending these cases.

“AIA appreciates the willingness of the Department to include insurers in this process,” added Farmer. “The surge in mold claims over the past two years has required insurers and regulators alike to work together to establish rational standards for mold coverage that provide consumers and businesses sufficient coverage options while also preserving a viable insurance market.”

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