Mold issue stirring emotions

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Mold issue stirring emotions

First of three insurance hearings opens today

06/26/2001

By Terrence Stutz / The Dallas Morning News

AUSTIN - Cryste DeShields cannot forget the day her family fled their home

in Rowlett.

It was last December after her husband, , had called a company to have

the air ducts in their brick house cleaned.

When employees of the company examined the attic, they made a startling

discovery - three to four years of mold buildup caused by water leaks. They

said they would not clean the ducts and left, suggesting the DeShields hire

an air-quality expert as soon as possible.

DECISION AHEAD

Preserve the coverage in all policies and let insurance companies seek

higher overall premiums to reflect increased losses during annual rate

hearings before the commissioner.

Eliminate the coverage from standard policies and let insurance companies

charge additional premiums for those homeowners who want protection against

mold damage.

Define more specifically what types of mold damage should be covered in a

homeowners policy and what responsibility the insurer has in covering such

losses.

A sample piece of wallboard from the house confirmed their worst fears - the

toxic mold stachybotrys, also called black mold, had permeated the ceilings

and walls of the 4-year-old home.

" We moved out that day, the Friday before New Years Day, and I've only been

back inside once, and that was in a chemical suit, " said Ms. DeShields, a

former sales representative for KXAS-TV.

Presence of the mold, she said, helped explain a series of medical problems

that afflicted her, her husband and their 2-year-old son, , for most of

2000. She was bedridden for much of the year and had to quit her job.

" I looked and felt like I was about to die, " she recalled.

The house remains locked up, and the DeShields are working with their

insurance company on a lawsuit against the homebuilder.

That dispute comes as Texas Insurance Commissioner Montemayor convenes

the first of three public hearings on the volatile issue Tuesday in Austin.

Scores of witnesses are expected to testify, including homeowners, insurance

company officials and representatives of consumer groups.

Earlier this month, a Central Texas family won a $32 million jury award

against Farmers Insurance Group stemming from the toxic mold contamination

of their 11,500-square-foot home near Dripping Springs. A judge is reviewing

that decision.

Farmers, one of the state's leading property insurers, has petitioned the

commissioner to remove mold coverage from all its homeowners policies in

Texas. Farmers officials cited an explosion of mold claims in Texas in the

last year in requesting the action.

" Four years ago, mold damage claims in Texas were virtually nonexistent, "

said Bill , a spokesman for Farmers. " That has changed dramatically.''

During the first six months of 2001, Farmers Insurance Group received more

than 1,000 new mold claims in Texas, he said.

An independent expert for Farmers estimated that mold damage claims in Texas

this year will total $128.5 million, a massive increase over last year. A

report from the expert also said that homeowners' premiums could rise as

much as 40 percent to pay for the increase in property losses.

Mr. said 29 states already have agreed to exclude mold coverage in

homeowners policies.

Consumer advocates have disputed industry arguments, saying the issue is

whether homeowners will be stripped of protection that they have had for

years in their insurance policies.

" The bottom line of this hearing is who the commissioner of insurance is

going to force to pay the millions of dollars of expenses related to mold

contamination and repair, " said Dan Lambe of Texas Watch, a consumer group.

" Will he force Texas homeowners who purchased coverage for such losses to

pay for it, or will he stand up for Texas consumers and force the insurance

companies who developed, wrote and sold homeowners policies with mold

coverage in them to pick up the tab? " Mr. Lambe asked.

Public testimony in Austin, which will be followed by hearings in Houston

and Corpus Christi, will be considered by Mr. Montemayor in determining how

mold coverage will be handled in homeowners policies in the future.

If Farmers receives permission to drop the coverage, other insurance

companies can be expected to follow suit and eliminate mold protection from

their policies.

For her part, Ms. DeShields hopes the commissioner will require that mold

coverage remain a part of the standard homeowners policy.

" This is not about damage from a water leak. It is about catastrophe for a

family, " she said. " We have lost our home and everything in it. We have

serious medical problems that are not going to go away.

" If our insurance company does not help us, I don't know what we would do.

This is what we have been paying our premiums for, to help protect us

against devastating circumstances like this.