N.J. DOBI Issues Guidelines on Mold/Fungus Exclusions

New Jersey Insurance Commissioner Holly C. Bakke has issued a bulletin to all NJ P/C Insurers giving guidelines on Mold/Fungus Exclusions for personal and Commercial lines. The bulletin, No. 03-24, replaces a previous set of guidelines contained in bulletin 02-14, issued July 8, 2002.

The main portion of the announcement is as follows:
1. Personal Lines and Commercial Lines Property
Coverage should be offered at $10,000, on an aggregate basis, with optional increased limits of $25,000, and $50,000 made available. The $10,000 annual aggregate coverage should include loss to property caused by mold, fungi, wet or dry rot or bacteria, the cost to remove mold, fungi, wet or dry rot, or bacteria from property covered under Section 1, the cost to tear out and replace any part of the building or other covered property as needed to gain access to the mold, fungi, wet or dry rot, or bacteria; and, the cost of testing of air or property to confirm the absence, presence or level of mold, fungi, wet or dry rot, or bacteria. Coverage should apply only if such mold loss results from a “Peril Insured Against” that occurs during the policy period. The limitation does not apply to losses due to fire and lightning.

2. Personal Lines Liability
Liability coverage should apply, up to at least $50,000, on an aggregate basis, for the total of all damages arising directly or indirectly, in whole or in part, out of the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of any mold, fungi, wet or dry rot, or bacteria. Increased limits up to $100,000 should be available, when requested by the insured.

The DOBI’s announcement also stated that as far as “Commercial Lines General Liability” was concerned, “Companies will be permitted to provide coverage for mold up to the policy limits, provide sublimits or exclude the coverage completely.” It also said insurers should continue “capturing Mold Data in the statistical format currently in use for other lines for premiums and losses,” and should notify policyholders of the options “to buy up to the higher limits.”