Because of the large number of mold-related claims, Allstate Insurance Co., the third largest property insurer in Texas, has stopped selling new policies on homes that have had water damage in the past three years, according to recent reports. Current policyholders will not be affected.

Justin Schmidt, Allstate's corporate relations manager, says that the company's data show that many mold claims reported today are the result of water losses that have occurred in the past. "It doesn't make good business sense for Allstate or our customers if we take on risks that have the potential for more serious losses in the future."

Allstate follows Farmers Insurance Group which decided to stop selling new homeowner insurance in Texas covering water damage. According to reports, State Farm has submitted a plan to the Texas Department of Insurance for a policy that would cover mold damage only in cases of sudden and accidental discharge of water, such as a broken water pipe.

The Associated Press reports that Progressive has stopped selling new policies in cases in which there are concerns about water and mold damage.

In an interview for the Associated Press, Karen Wilson, a real estate agent in Round Rock said, " It would be devastating to the housing market in Texas if most insurance companies take similar action." Wilson said she has seen house closings delayed in the past few weeks because homebuyers couldn't get insurance.

Published: August 24, 2001

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