Mold Updates – TDI Authorizes State Farm to Sell Homeowner’s Policy Limiting Mold Coverage

The Texas Department of Insurance recently authorized State Farm to sell Texans the same homeowner's policy that the company markets in other states. The newly approved form provides limited coverage for mold, but enables Texas consumers the option of purchasing endorsements that provide additional mold coverage.

State Farm's new homeowner's form is similar to that which the Commissioner of Insurance approved in November 2001 for standard Texas policies. The basic State Farm policy includes coverage for damage caused by “sudden and accidental” discharges of water from plumbing, air conditioning systems and appliances. Consumers can purchase endorsements adding mold remediation coverage in amounts of $15,000, $25,000, $50,000 or full policy limits.

Unlike the standard HO-B form, the new State Farm policy will not cover damage from slow leaks or damage to slab foundations resulting from plumbing leaks. However, State Farm will offer existing customers a one-time option of purchasing endorsements providing similar coverage to that offered under the HO-B form, including limited coverage for slab foundations. Customers who do not purchase the endorsements will not have the option of obtaining such coverage in the future.

Because the newly approved form provides less coverage than the previously marketed HO-B policy, State Farm agreed to lower the rates it will charge Texas consumers. Adoption of the State Farm policy by the Texas Department of Insurance means that any insurer doing business in Texas may apply with the Commissioner for approval to market the form. Any such companies seeking to use the form must meet certain criteria, including satisfying the Commissioner that rate charges for the policies will be commensurate with the coverage offered.

State Farm will provide its current Texas customers with a letter explaining the new homeowner's form and the coverage options now available regarding mold.