Date:December 19, 2002
To:All Wisconsin Licensed Property and Casualty Insurers
From:Connie L. O'Connell, Commissioner of Insurance
Subject:Updated Guidance on Coverage Issues Concerning Mold

On June 21, 2002, the Office of the Commissioner of Insurance (OCI) issued a bulletin concerning coverage for mold in property and casualty insurance policies. The bulletin can be found on OCI's Web site at http://oci.wi.gov/bulletin/0602mold.htm. The purpose of the bulletin was to provide information to insurers on what guidelines the office was using in its review of property and casualty policy form filings relating to mold. Since the OCI issued its June 21 bulletin, the office has obtained additional information concerning the issue of coverage for mold in personal lines property and casualty policies. The purpose of this bulletin is to clarify OCI's June 21 bulletin on this topic based on this additional information.

Many homeowners insurance policy forms approved for use in Wisconsin contain anti-concurrent causation language that, in effect, excludes coverage for first party property damage from mold, whether or not the mold was a result of a covered cause of loss. However, homeowners insurers may not refuse to cover damage caused by a covered peril solely on the fact that mold is present in or on the damaged property. OCI expects insurers to pay for repair or replacement of property damaged by a covered peril according to the terms of the applicable policy even though repair or replacement of damaged property may result in removal or clean-up of mold incidental to such repair or replacement. Costs directly associated with the removal or remediation of mold may be limited or excluded according to the terms of the applicable policy and the insurer's claim adjudication procedures. Insurers are encouraged to offer mold coverage buyback endorsements or riders for those individuals who desire such coverage.

The office is refining its internal guidelines on personal lines policy form reviews. OCI will not disapprove personal lines policy form filings that contain anti-concurrent causation language and that limit first-party property coverage for mold that arises from a covered cause of loss so long as first-party property insurance claims submitted under such policies are adjusted in the manner described in the preceding paragraph. With respect to the liability portion of personal lines policy form filings, the office will not disapprove a filing that specifically limits third party liability coverage for claims resulting from mold so long as the form provides at least $50,000 of coverage.

The office's internal review guidelines on commercial policies remain as outlined in the June 21 bulletin.

Any questions concerning this bulletin may be directed to Phil Kress at 608-266-0430 or philip.kress@oci.state.wi.us.

Thank you.