Second insurer to end home policies

By Terrence Stutz / The Dallas Morning News

AUSTIN – A second insurer has joined Farmers Insurance Group in halting the sale of new homeowners policies in Texas because of potential losses from water damage and mold claims.

Progressive Insurance Co. said Wednesday that its moratorium on new policies was prompted by the "emerging exposure" of insurers to costly black mold claims.

"Because the potential liability is both undefined and potentially unlimited, Progressive needs to assess the situation and develop a strategy to deal with it before accepting any new business," said Kathleen Colan, a company spokeswoman.

"Effective immediately and until further notice, Progressive will not accept any homeowners business in Texas."

Ms. Colan said the action does not affect existing policyholders.

Progressive is a major seller of auto insurance, but only recently entered the homeowners insurance market in Texas. It has only a small share of the market.

Farmers, the second-largest property insurer in the state, said earlier this week it would quit selling full-coverage homeowners policies on Aug. 15 because of increasing losses from water damage to homes – including mold contamination.

Other companies such as State Farm and Allstate still are marketing their homeowners insurance, but said they are considering all options because of potential losses related to mold.

State Insurance Commissioner Jose Montemayor has been asked by Farmers to allow the company to delete mold coverage from its homeowners policies in Texas.

Most policies in Texas now cover mold damage if it results from a water leak, such as a broken pipe.

Mr. Montemayor, who has been holding public hearings on the issue around the state, has asked the five largest insurers to report to him their total claims related to mold damage.