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Say what you will about consumers ranking the insurance industry as one of the least trusted in the market, the growing number of water-related insurance benefit payouts is wringing the industry's coiffers dry.
Insurers say they want to leave the homeowners insurance market or curtail coverage in a growing number of states because water-related claims are not a drop in the bucket.
In California alone, insurers paid out $430 million in 2001, compared to less than half that much, $206 million, in 1997, according to the Insurance Information Network of California, a non-profit insurance industry association which released the findings one June 5.
The network conducted the survey to quantify it's side of the story in the wake of mounting moisture related insurance claims that are putting homes and homeowner insurance coverage at risk.
In 1997, water related homeowner insurance claims in California amounted to only one in five of all claims. Now they are one in three and insurers have taken action to reduce their exposure in a growing number of states including Texas, Louisiana, Alabama and Missouri, as well as California.
"Water represents a disproportionate share of the claims payments made on homeowners insurance policies," said Candysse Miller, executive director of the non-profit trade association. The group polled companies representing 63 percent of the California's homeowners insurance market.
"The cost of these claims is helping to fuel a homeowners insurance crunch as insurers struggle to keep these skyrocketing costs under control," Miller added.
On the average, water-related claims for damage caused by burst hoses and pipes or leaks from washing machines, icemaker connections, lavatories and other household water fittings amounted to $4,730 in 2001, nearly double the $2,537 average water claim in 1997.
Insurers surveyed paid nearly $1.6 billion in water related claims between 1997 and 2001, the network's survey says.
Mold claims preceded water worries
Water-related claims are certainly mounting, but multi-million dollar court judgments against the industry over related mold claims also has the industry's attention.
Mold,which can appear as an orange or black and furry or wet and slimy growth, is produced by several types of fungi as they feed on and destroy organic matter, including wood and other materials found in your home and other buildings.
Mold feeds and breeds best when moisture, temperature and lighting levels combine to create favorable conditions. Introduce moisture to a home's dark corners and the areas become a petri dish for the fugus.
A fungus that has always been among us, mold is not the real problem, but a symptom of other concerns.
"Mold is not only a problem in itself, but also a symptom of a water problem. Determining the cause of the problem, whether that is a leaky roof, facade issues, excess humidity or a malfunctioning HVAC system is often a complex process of detective work," according to Portland, ME-based Criterium Engineers.
Some experts say increased levels of mold are related to changing weather patterns, including excessive rain and frequent temperature swings. Some of the blame for the increased incidents of mold has been laid at the door step of home builders for doing their job too well -- or not well enough. Homes built to be more energy efficient may not also provide enough ventilation to remove mold-nurturing moisture. Bad plumbing and improperly installed EIFS (Exterior Insulation and Finish Systems) also create moisture problems.
Mold litigation and mold mitigation construction techniques were hot topics at the International Builders Show in Atlanta earlier this year.
"These figures are merely a snapshot of the problems that uncontrolled water losses are causing the homeowners insurance industry," Miller said.
"Hundreds of millions of dollars is lost each year to water damage in California – and the cost of water-related insurance claims is climbing rapidly," she added.
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