If you find it harder to get a homeowner's policy next month, you could blame mold.

Yes, mold.

State Farm, the largest insurer in California representing 22 percent of the market, decided last week that it would no longer write new homeowner policies in the state starting May 1. While that's partly due to past losses, it's also in large part due to the rising cost of mold-related claims.

Across the country mold has become a toxic problem, with homeowners, renters and building tenants alleging that a severe form of the fungus in their homes or offices is causing symptoms from allergies to lung bleeding.

For insurers, the issue threatens to become their next asbestos: a health hazard they'd never anticipated that could potentially cost billions of dollars in both claims and lawsuits.

For consumers, the issue is likely to increase the cost of homeowners insurance, already poised to go up as much as 25 percent for reasons related to past underpricing and rising construction costs. In Texas, which has had the most claims increases in the nation, rates have already nearly doubled for many homeowners.

In California, where the rise in claims comes second only to Texas, insurers are scrambling to stem their losses from mold.

Covering cleanup

Currently, most insurers in the state cover mold cleanup if it is part of a claim for sudden and accidental water damage, such as a pipe bursting. Most insurers exclude mold if it's not part of a water damage claim, such as mold that has grown over years. Allstate, the third-largest insurer in the state, in January capped the amount it will pay for mold cleanup at $5,000, even if it's part of a water-damage claim.

More than 200 insurers have now applied to the state's insurance department for permission to further restrict mold coverage, leaving out mold caused by faulty maintenance by the homeowner or even in some cases mold from water damage.

A bill making its way through the state legislature would essentially require insurers to keep the level of coverage that's now standard, and forbid many requested restrictions. The bill, despised by the insurance industry, passed the Senate insurance committee Monday and now must be approved by the Senate and Assembly to become law.

State Farm says its moratorium on new policies is temporary but indefinite. A spokesman said it is not a reaction to the proposed legislation but aims to avoid further losses until it rebuilds a financial cushion. State Farm has 1.5 million home policyholders in California.

The reason for the explosion of mold claims is a matter of bitter debate. Some consumer lawyers and activists blame certain new construction materials such as stucco, mold-friendly glue for wood floors, recycled newspaper used as a backing for sheetrock, and impermeable vinyl wallpaper. Some claim that newer energy-efficient buildings are airtight, which doesn't allow water to dry.

Insurers say consumer lawyers have invented an epidemic and have exploited generous insurance laws in states like Texas, where insurers until recently would cover even costs from longstanding mold.

Still, mold has its high-profile victims, including entertainer Ed McMahon -- who blames the fungus for sickening his family and killing his dog Muffin -- and Erin Brockovich, the famous legal assistant who helped win hundreds of millions of dollars from PG&E over environmental contamination.

Water-damage claims involving mold are soaring.

Farmers Insurance, the second-largest insurer, is getting 800 such claims a month in California, up from 200 earlier in the year. State Farm said the average water-damage claim for the region that includes Silicon Valley was recently nearly $3,400, up from $2,300 in 1999.

Very expensive

Mold is an especially expensive problem for insurers for many reasons. For one, they are more often evacuating homeowners during mold cleanup and paying for temporary housing to avoid allegations of endangering health. Also, contractors who don't want to be sued over their own work sometimes won't repair water-damaged homes unless their work is inspected by so-called industrial hygienists. Such inspections can cost $3,000 to $5,000 apiece, said Robert Hartwig, chief economist for the Insurance Information Institute.

``The expenses associated with adjusting the claim can outstrip the cost of paying the claim itself,'' said Hartwig.

Emanuel Enes, a San Jose claims team manager for State Farm, said he's seeing a marked increase in public awareness about mold, including some paranoia. For some policyholders who discover mold, the fungus is blamed for ``every ache and pain, even though they might have had it before the damage.''

Skyrocketing rates

Already, mold is contributing to skyrocketing insurance rates for home and apartment or condo builders, who sometimes get sued years down for allegedly faulty construction that causes mold. Some insurance brokers report that liability insurance costs for construction clients have gone up 500 percent or more, while others have difficulty finding coverage at all.

The mold surge comes as California homeowners are already facing increased homeowners rates of 5 percent to nearly 25 percent. Allstate has recently requested a 22 percent increase in homeowners rates.