The California Senate has passed SB 1763, requiring coverage of mold as an ensuing loss for policies issued, amended or renewed after January 1, 2003. However, the bill also provides that insurers can exclude mold as a covered loss if the exclusion is stated in clear, explicit, and understandable terms.

Please see the following for a recent amended text of SB 1763. For further information regarding CA legislation, please see www.leginfo.ca.gov/bilinfo.html

BILL NUMBER: SB 1763
AMENDED BILL
TEXT AMENDED IN SENATE APRIL 30, 2002
AMENDED IN SENATE APRIL 9, 2002
INTRODUCED BY Senator Ortiz
FEBRUARY 21, 2002

An act to add Sections 790.20 and 2071.2 to the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST SB 1763, as amended, Ortiz. Insurance: mold damage. Existing law provides that the Department of Insurance is responsible for regulating the business of insurance in this state. This bill would require any property or liability insurance policy issued, amended, or renewed on or after January 1, 2003, to cover mold as an ensuing loss. The bill would provide, however, that insurers could exclude mold as a covered loss if the insurer states the exclusion in clear, explicit, and understandable terms. The bill would require an insurer or its representative, claims handler, expert, or adjustor to disclose immediately all relevant information to an insured if mold is implicated, to be present, to result from a claim and to inform an insured when mold is reasonably believed to have ensued from a covered loss.

Vote: majority.
Appropriation: no.
Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 790.20 is added to the Insurance Code, to read: 790.20. (a) In addition to any other duty or obligation required by law, if an insurer or its representative, claims handler, expert, or adjustor has reason to suspect that mold is implicated or likely to be present or results from a given claim, it shall immediately disclose all relevant information, pursuant to Section 2071 as contained in the "Requirements in case loss occurs," to the insured. (b) In addition to any other duty or obligation required by law, an insurer has a duty to inform the insured whenever mold is reasonably believed to have ensued from a covered loss.

SEC. 2. Section 2071.2 is added to the Insurance Code, to read: 2071.2. (a) Any property or liability insurance policy , as set forth in Section 2071, that is issued, amended, or renewed on or after January 1, 2003, in this state by any insurer shall cover mold as an ensuing loss. (b) If an insurer intends to exclude mold as a covered loss, the insurer shall state the exclusion clearly, explicitly, and in readily understandable terms.