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The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

Jury Awards $32 Million To Texas Homeowner In Mold Damage Insurance Coverage Action

AUSTIN, Texas -- A Texas jury on June 1 awarded a homeowner $32 million after
finding that a carrier acted in an unfair, deceptive and fraudulent way when evaluating a mold property damage claim (Mary Ballard, et al. v. Fire Insurance Exchange, et al., No. 99-05252, Texas Dist., Travis Co.).

(Expert Testimony Order. Document #42-010606-102R. Verdict Sheet, Jury Instructions. Document #42-010606-111V.)

Mary Melinda Ballard had a homeowners policy with Fire Insurance Exchange, a subsidiary of Farmers Insurance Group, in 1988 when she had a bathroom plumbing leak. The hardwood floor buckled several months later. When the wood did not dry, Ballard contacted her insurer.

Farmers sent an adjuster, who attributed the damage to slab settling, which was not covered under the policy. Later, Farmers' engineer reported that Ballard had two leaks: one in the bathroom and one by the refrigerator. Ballard's contractor advised removing the damaged floor to avoid developing mold.

Ballard alleged that despite repeated warnings about dangerous mold, Farmers' adjuster refused to pay for removal of the floor. Instead, the adjuster wanted to remove only the most severely damaged boards, replace them with plywood and cover them with carpet remnants, according to the complaint.

The next month, Farmers offered to settle for $108,316. Ballard refused the offer because damage had spread to windows, door frames, stairs and walls and because contractor estimates put the damage at between $160,000 and $197,000. Farmers also attempted to impose a coinsurance penalty, claiming that Ballard was underinsured. Ballard alleged she relied on Farmers' agents in determining how much coverage she needed. 

 

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