La. Approves Exclusions

Louisiana acting Commissioner of Insurance J. Robert Wooley announced the approval of terrorism, mold and pollution exclusions for certain lines of insurance. Wooley said approval of specific coverage exclusions is intended to address the concerns of insurance companies so they can provide additional markets to Louisiana policyholders. He issued an announcement of the approvals following a meeting with industry representatives. The approvals will be granted until Congress enacts legislation to provide assistance to the terrorism reinsurance market or until other market conditions warrant a change in the department’s position on terrorism exclusions. Wooley noted that Louisiana workers’ compensation laws do not permit exclusion of terrorism from workers’ comp insurance. He said that terrorism exclusions would be required to “clearly define excluded terrorist acts in such a manner that they do not exclude coverage for other potentially violent acts such as vandalism, malicious mischief, and riot.” Spurred by high profile cases in Texas, the department approved exclusions for mold as a covered loss, and exclusions for remediation costs such as testing, monitoring, containment, and treatment. In an advisory letter, the department indicated that insurers should take note that standard homeowners’ policies in Louisiana do not provide coverage for seepage of water or for damage arising from wear and tear or the failure to do proper maintenance. Wooley noted that “exclusions should not be used to deny coverage for the costs of repair and restoration of the insured premises for damages arising from a covered cause of loss, even if some mold is present.” For several years, the LDI limited the use of pollution exclusions in response to over-utilization by some insurers. This has created a backlog of forms pending approval and caused concerns for some carriers. In response to industry requests, the department approved the current ISO Absolute Pollution exclusion in policies and endorsements, and the current ISO Total Pollution Exclusion Endorsement. The notice regarding the use of terrorism exclusions and the advisory letters on mold and pollution exclusions are available on the department’s website at www.ldi.state.la.us.

Topics Catastrophe Louisiana Pollution