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Published
by the Corpus Christi Caller-Times. CLICK FOR NEWSPAPER DELIVERY
Thursday, September 27, 2001
Nueces leads in mold claims
Average claim cost here is 5 times the statewide average
By Naomi Snyder
Caller-Times
Homeowners in Nueces County are more likely to file mold damage claims than in any other part of the state, new statistics from the Texas Department of Insurance show.
And although other parts of the state had costlier average claims, the average cost of insuring homeowners in Nueces County was far greater than in any other region, according to figures collected from the top three insurance companies doing business in Texas.
Insurance companies, citing rising costs, are calling for a rewrite of the standard homeowner's policy to exclude all kinds of mold coverage. Homeowners, meanwhile, are complaining of homes that make them sick and insurance companies that delay settlement of claims while mold grows in their homes.
The average cost of a mold-related claim per policyholder in Texas grew more than eight times, from $17.09 in the first part of 2000 to $147.68 in the second quarter of this year.
Corpus Christi helped buoy those numbers.
The average cost per policyholder of a mold-related claim in Nueces County was $520.66 during that period, more than five times the average statewide cost.
"It clearly demonstrates that the insurance industry and our customers are in a crisis situation,'' said Jerry Johns, president of the insurance trade group Southwestern Insurance Information Service.
In the past few months, State Farm, Farmers, and Progressive Insurance companies all announced they would stop selling new water-damage policies in Texas, which meant they won't offer the standard homeowner's policy to new customers.
$32 million judgment
Farmers was hit with a $32 million civil judgment in June, including punitive damages for dealing in bad faith, after a Dripping Springs couple's home was infiltrated with a dangerous mold.
Consumer groups say the insurance companies are pressuring the insurance commissioner to let them walk away from their responsibilities to their customers.
"Once they start reducing coverage, it will be hard to get it back,'' said Dan Lambe, executive director of the consumer group Texas Watch. "It's really unacceptable for the companies to say we're going to walk away from it. It's not a responsible thing to do.''
Handling of claims
He also said consumers are complaining about inefficient handling of claims, which allows mold to spread during the lag.
He said it would be hard to pinpoint why Corpus Christi leads the way in terms of mold claims, about 13 per 1,000 policyholders in the past year and a half.
Higher costs here
Those connected to the insurance industry speculated that a combination of a humid climate and a litigious population was leading to higher costs for the insurance industry in Corpus Christi.
"Far too many claims have involved public adjusters and plaintiff's lawyers,'' said Rick Gentry, the executive director of the Insurance Council of Texas. "Now, everybody says 'I've got a water damage claim and I also have mold, too.'''
Those in the insurance business scratch their heads about why mold, which has been around probably longer than people, suddenly has become such a problem.
'We took care of it'
Mike Swinney, an insurance adjuster in Corpus Christi, said he has been in the business for 30 years and has watched attitudes change, particularly as fear has grown about mold and people abandon their homes.
"People who have lived with mold forever are now sick and they're panicking,'' he said.
"Pipes have broken, dishwashers have broken and flooded houses forever. We took care of it.''
Slow leaks
Jim Davis, a spokesman for the Department of Insurance, said most mold cases involve slow leaks that were not discovered, hidden behind walls.
Everything from new building materials that seal in moisture and an increasingly allergic population, to attention from the news media, has been blamed.
The staff of the Department of Insurance has proposed a $5,000 limit for mold claims. The staff proposal would cap mold damages to $5,000 but would allow homeowners to purchase additional mold coverage.
The Department of Insurance will host a public hearing on the proposal Oct. 16 in Austin.
Contact Naomi Snyder at_886-4316 or snydern@caller.com
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