Mold is putting a new stain on homeownership - higher costs for homeowner's insurance. Not only are some companies such as State Farm not writing any new homeowner policies in Texas, premium renewal rates are being hiked up at a rate of between 28 and 33 percent, says the company. But that depends on how you figure it, with State Farm's estimation being on the generous side.

As a customer of State Farm for decades, I was personally shocked by the amount of the rate increase. Texas already has one of the most notoriously high homeowner insurance premium costs in the nation, thanks to tornadoes, gulf storms, river floods and other disasters.

Most of these disasters result in tremendous water damage to homes, not to mention similar damage that is caused by poor maintenance or appliance breakage within the home.

And as we all know, moisture leads to mold.

It's not every story that I get to be the source, but last year, I paid $1,057 annually for homeowners' insurance. This year my policy renewed in May, and my new rate is $1,524, a whopping 45.13 percent increase - and that's with a 15 percent "good customer" discount.

Editor's note: To figure the increase, calculate the increase ($477) and divide it by the original premium $1057.00=45.13 percent.

"It is just an increase in rates that all homeowner policies have experienced,' explains Joanna Gonzales, customer service representative with Annette Stone Insurance in Dallas.

State Farm is the leading insurer of homes in the United States, insuring over 11 million residential properties, according to the company's Web site.

Contributing to high premium costs in Texas is the fact that State Farm policy holders are insured by a "state-specific" policy which offers coverage on items that are considered homeowner maintenance in other states. And it doesn't help that State Farm's underwriter State Farm Lloyds, incurred an underwriting loss of $838.9 million in 2001, representing $1.84 in claim losses and expenses for every $1.00 of premium the company collected.

No wonder they don’t want to write new policies in Texas - and haven't since September, 2001.

To combat higher costs, State Farm will start offering its national insurance policy in Texas in September, 2002.

According to a March press release, the existing state-mandated homeowners insurance policy contains extensive coverage for water damage, foundations and mold, with no ability for the policyholder to eliminate any of those coverages. State Farm's national policy gives consumers roulette-wheel options of picking and choosing some items they want covered and paying a lower price for their coverage.

The reason State Farm wants to institute its national policy is that it will give policyholders a greater degree of control in tailoring insurance coverage to meet their needs, says the company.

"This is a positive development for Texas policyholders," said Ron Dodd, Senior Vice President of State Farm's Texas zone. "A truly competitive market is one that offers consumers a variety of products from which to choose and allows them to make decisions about those products."

In some areas, State Farm promises a premium reduction - meaning the policy holder can remove coverage on certain items - like mold. Rates may go up for others who have not yet had rate increases implemented in November 2001 and February 2002 added to their policies.

Dodd continued, "As much as we'd like to think that we need an insurance policy that's unique to Texas, the fact of the matter is that the state's existing policy provides insurance coverage for items that in almost every other state are considered a property owner's maintenance responsibility. As a result, the costs of those maintenance-type activities have been rolled into the prices that we all pay for homeowners insurance. State Farm's national policy gives our existing Texas customers the option of keeping these coverages at an appropriate price."

While State Farm self-applauds this solution to high premium costs, it also says it is "seeking other solutions, and that the new policies will "help address some of the claims cost issues that have driven Texas homeowners insurance premiums higher."

Any way you look at it, the cost of homeownership just went up because more of the risk has been shifted to the homeowners.

For their sakes, let's hope they make the right decisions.

Published: May 14, 2002

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.