LOS ANGELES--(BUSINESS
WIRE)--March 6, 2002--Responding to a rising tide of mold-related
insurance claims
and lawsuits, insurance companies are refusing to write policies on homes and commercial
buildings if prior water damage claims have been made or if inspections turn up the
potential for mold problems, according to Jenny Jones, president and CEO of Elkins/Jones,
a leading property insurance brokerage firm.
In addition, companies are starting to non-renew
policies with prior water damage activity. ``Problems in obtaining homeowner insurance
could delay thousands of home sales in California,'' says Jones, pointing out that home
sales have been one of the strongest pillars of the economy. She notes that most mortgage
lenders require that a homeowner policy be issued before closing a home loan. Recently, an
insurer refused to cover 10,000-square-foot Beverly Hills home because the company's
inspector found water build-up in the pool house, Jones reports.
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California closely follows Texas in mold-related
claims, according to the Insurance Information Institute, and last year a jury awarded
$18.5 million in damages to a California homeowner, of which $18 million was punitive
damages. ``If current trends continue, and a mold exclusion is not passed by the
Department of Insurance, major insurance companies may consider not selling new homeowner
policies in California as they already have in
Texas,'' Jones adds. ``This could have a disastrous affect on our economy
and the livelihoods of homebuilders, realtors, escrow companies and
others,'' she says. A more likely possibility is that premiums will escalate
significantly. One insurance company says premiums could increase as
much as 40 percent to handle the volume of claims stemming from mold.
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