The National Association of Independent Insurers is urging the Florida Department of Insurance to take prompt action in order to prevent the mold issue from spiraling out of control and creating crisis conditions in the insurance marketplace.
“Unless the department takes quick action, Florida homeowners’ insurance rates could skyrocket,” Donald Griffin, NAII assistant vice president for Business and Personal Lines, said. “Florida insurers are already experiencing an increase in the number of mold claims and are seeking clarification regarding policy coverages. Conditions are ripe for further growth in the number and severity of claims. Unless this is check, the state could easily find itself facing an availability and affordability crisis.”
NAII is urging the department to approve exclusions for mold-related losses or set reasonable coverage limits. Many states have approved the ISO endorsements for mold to address this issue and stabilize the market.
Another critical element in resolving this issue is to bring clarity to what is and is not covered. Insurers have generally paid for mold claims when it resulted from a covered water damage claim. However, now the trend is for insurers to be expected to pay for mold damage losses that are caused by a lack of maintenance.
“A homeowners insurance policy is not a home warranty or maintenance product,” James Taylor, NAII’s southeast regional manager, said. “By bringing greater clarity to coverage issues, the department would be aiding consumers and insurers. The uncertainty creates questions and contributes to the growing number of lawsuits. Given the state’s unique litigation environment, this situation has the potential of significantly increasing costs.”
NAII is also recommending that market competition be a cornerstone principle of any solution that is developed. “Allowing the market to work will ensure that insurance products are priced appropriately and that premiums are reasonable for Florida consumers,” Griffin added.
Topics Florida
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