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| | 1/5/2009 11:32:09 PM |
The company will stop virtually all home coverage there.
November 11, 2001 - Citing mold claims, Farmers Insurance Group said it won't renew most homeowners insurance policies in Texas next year, effectively putting it out of the market.
The company, the state's second largest insurer, had already decided in August to stop selling new comprehensive home policies.
The Los Angeles-based company said the mold coverage threatens its financial stability.
"Farmers cannot ignore the losses it has suffered," said John Hageman, executive director of Farmers in Texas. "However, we are investigating other alternatives and are hopeful a solution will eventually emerge which will allow us to again offer broad coverage."
Agents were told Friday of the decision to end renewals as of Dec. 30 on the most common type of homeowners insurance for its 600,000 customers.
Farmers was the first major company in Texas to end renewals. The state's other two largest insurers, State Farm and Allstate, have stopped selling comprehensive policies to new customers because of the rising mold claims.
The Farmers move came as state Insurance Commissioner Jose Montemayor considered new rules that would sharply limit mold coverage for Texas homes, as insurers see if there is anything we can do," said Mark Hanna, an Insurance Department spokesman.
An industry representative faulted Montemayor for not doing enough to help insurers.
"Competition, not artifical control of products, keeps insurance available and affordable in Texas," Southwestern Insurance Information Service President Jerry Johns said Saturday.
The comprehensive policies provide full coverage on a home, including mold damage. About 96 percent of insured homeowners in the state have such protection.
Consumer groups criticized the Farmers decision.
"This is one more move in their effort to have their way on the mold issue and other important issues," said Dan Lambe of Texas Watch.
Farmers reported Friday that its water and mold losses increased 158 percent from August 2000 to August of this year. In 1999, the company had 12 mold claims in Texas.
Last year it had 499, and already this year it has been hit with nearly 8,000 - including 1,500 in September.
Farmers also has been hit with numerous homeowner lawsuits, including one that resulted in a $32 million jury award earlier this year for an Austin-area family whose home became uninhabitable because of infestation by toxic mold.
A state judge recently upheld this award.
Experts are divided on why there has been a surge in mold claims, but they note incrased public concern over toxic molds such as stachybotrys, the so-called black mold.
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