Court backs State Farm in mold ruling

September 1, 2006

12:23 PM CDT on Friday, September 1, 2006

Associated Press

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AUSTIN - The Texas Supreme Court has ruled in a case involving State

Farm that standard homeowner policies used to recover damages from

mold didn't cover mold.

In a 7-2 decision announced Thursday, the court sided with State

Farm, which said a policy bought by a Deer Park family excluded mold

coverage.

The ruling could affect more than 250 similar cases against State

Farm and other claims filed against other insurers before July 2002,

when companies had to use standard policies written by the Texas

Department of Insurance.

A spokeswoman for State Farm said the company believed its policies

didn't cover mold caused by things such as broken pipes but paid

some claims anyway while reserving the right to contest the cases.

Sophie Harbert said State Farm told policyholders that it was

uncertain whether mold was covered.

, a lawyer for the Deer Park family that filed the

claim, and Fiess, said he was considering asking

for a rehearing. He questioned why the insurers paid out mold claims

if they didn't think they were covered by homeowner policies.

The family found black mold behind drywall that had been damaged by

flooding, but they said much of the mold grew from leaks in the

plumbing, roof and house before the storm. State Farm paid $34,425,

but the Fiesses sued for additional compensation.

The family said language in the policy excluding coverage for mold

should be ignored because another clause stated that loss from water

damage was covered.

Writing for the court majority, Justice Brister said the

wording of the mold exclusion was clear, no matter what other parts

of the policy said. Dissenting justices Medina and Harriet

O'Neill said the policy was ambiguous and should be interpreted in

the homeowner's favor.

Winslow, executive director of Texas Watch, a consumer-advocacy

group, said the court went out of its way to protect insurance

companies. He said homeowners are paying too much for insurance.

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