The insurance companies are reeling from the high cost of doing business in California and that cost is being passed onto consumers. The mold scare, increased litigation, burdensome legislation, rising housing costs and the catastrophic losses of September 11 have caused many insurers to hike rates 10 to 40 percent and stop carrying policies without a completely clean loss record. One company, State Farm, quit issuing new policies in mid-2002. The state's insurance rates are the ninth costliest in the country.

Toxic mold claims are one growing reason many insurers are raising rates or refusing to write policies. The American Insurance Administration attributed the rise to "hysteria over mold" problems. Nationwide, mold claims have cost more than $1 billion last year, a five-fold increase from 2000.

Most standard insurers have addressed the problem of mold by excluding it entirely from insurance policies, offering it as a capped sublimation or offering it as a buyback on preferred policies.

Loss ratios for insurance carriers have been between 130 and 140 percent, which translates into a 20 to 30 percent increase in premiums for homeowners. It has been suggested that insurance companies are also raising rates to offset losses in the stock market.

It will take some time for the California market to stabilize and the market remains "hard." Because the state has burdensome over-regulation and is overly politicized when it comes to insurance rates, it is difficult for insurers to make necessary increases. Companies are relying more on underwriting to meet their obligations and reduce losses. Homeowners can expect the rate increases to continue.

Homeowners are advised to be proactive and make informed decisions to keep their rates down. Be wary about filing claims. Insurance companies tend to raise rates for those who file claims. Homeowners are better off calling someone to repair the problem than calling their insurance agents; especially when the repair is little more or less than the deductible. Other ways to keep insurance rates lower include:

• Shopping around. Different insurance companies can offer a variety of rates on the same property.
• Review your deductible. A higher deductible can significantly lower premiums.
• Maintain your property - especially the water system. Water damage is one of the biggest causes of homeowners' claims; up 102 percent from 1997.
• Talk to your state legislator about your concerns.
• Be familiar with your policy. Many conflicts could be avoided if consumers would familiarize themselves with their policies.