Florida OIR Releases Final Order on State Farm Mold Filing

The Florida Office of Insurance Regulation (OIR) issued its final order regarding three homeowner policy endorsements that sought to exclude mold damage resulting from a covered peril. State Farm Florida Insurance Company (State Farm) also sought to limit the amount of separate mold coverage that could have been purchased to a maximum of $50,000.

According to an OIR bulletin, the order states that State Farm can have the endorsement forms approved, but it must file and have approved new forms and rates that increase mold coverage up to the limits of the homeowners’ policies. Until that happens the company cannot change any coverage presently in place.

Commenting on the order, OIR Director Kevin McCarty said, “We believe it was the clear intent of the Legislature to give policyholders the right to obtain comprehensive insurance coverage. The statutes we cited in our arguments certainly set this standard, and we fervently believe that standard intended for mold resulting from a covered peril to be insured. With this order, we have preserved policyholder rights for Florida homeowners and given State Farm a measure of predictability it needs to continue serving the Florida insurance market.”

Subsequent to the OIR disapproving the filing, State Farm requested to have the matter brought before the Division of Administrative Hearings (DOAH). Administrative Law Judge William R. Cave heard arguments in January and February of 2003. He found that mold, resulting from a covered peril, had been historically covered, even by State Farm; that the requested endorsements deny payment for mold damage historically provided to insureds and eliminate coverage for mold that currently exists; and that there is scant Florida experience to support the need for limitations or exclusions of mold coverage.