Alliance to Coordinate Input on Mold Coverage in Ga.

The Alliance of American Insurers said Georgia Insurance Commissioner John Oxendine has asked the group to coordinate an insurance industry effort to develop language that will be used to spell out coverage for mold in state homeowner and commercial insurance policies.

“This is an excellent opportunity to provide valuable input from the companies most directly impacted by mold claims. We welcome the challenge of coming up with wording that will strike the appropriate balance between consumer protection and what insurers need to get a handle on for these types of claims and their costs,” said Robert Herlong, vice president of the Alliance’s Southeast Region.

Georgia has not yet approved any personal lines mold filings and only a few commercial filings. In a meeting with insurers, Oxendine emphasized that he wants to leave the current protection that consumers have for water damage intact, though he will consider placing limits for the cost of mold remediation. He added that defense costs should not be included in any mold sub-limits.

Oxendine’s first concern is for consumer protection; however, he made it clear he also wanted to protect insurers from the “abusive lawsuits” seen in other parts of the country, and does not want to promote an environment conducive to “lottery type” litigation. By the same token, he also does not want to permit exculpatory language that might be “misused” by adjusters.

No timetable has been set for the Alliance to submit proposed language to the department, although it is expected to take several weeks to reach consensus among the industry groups.

“Currently, 36 states and the District of Columbia have adopted mold exclusions or limits—some good, others not,” said Kirk Hansen, Alliance director of claims. “The Commissioner’s openness to limits is laudable. Mandating unlimited coverage for mold would only hurt consumers by disrupting the state’s homeowners insurance market.”

“Any appropriate solution to the mold issue must address availability, affordability and choice, otherwise the Georgia consumer will be the ultimate loser,” Herlong added.

“Extensive coverage for mold was never contemplated in insurance underwriting and pricing until recently, and mandating its coverage will only create financial instability for insurers and availability and affordability problems for consumers. By allowing insurers to offer a variety of coverages at a range of prices, consumers would be allowed to choose the coverage they need at a price they can afford.

“The insurance industry functions best when free-market forces are allowed to operate, allowing consumers to pick and choose the products and coverages that are best for their individual circumstances.”

Topics Georgia Market