The company announced last night it had been given final approval from the Texas Department of Insurance to offer consumers a policy with a change from the state-prescribed HO-A homeowners policy format.

Under the Homeowners Amendatory Endorsement (TX040), which was approved, customers will be offered additional limited coverage for water losses not included under the normal HO-A homeowners policy. This endorsement, together with the HO-A homeowners policy, creates the foundation for Farmer's HO-A Choice Plus Policy, the company said.

John Hageman, Farmers Texas executive officer, said: "Farmers has worked hard to find a solution to the Texas homeowners' insurance dilemma and we are excited to be able to offer this array of coverages.''

Farmers will not, however, resume sales of HO-B model polices, which it stopped writing and renewing last year. The decision to stop writing was announced a month after a Texas jury slapped it with a $32 million verdict for mishandling a policyholder's mold claim.

Mr. Miller said the company had stopped writing HO-B policies because they had resulted in "lots of losses" for Farmers--not all of it due to mold, although "mold was a big driver, a large contributor" to the loss picture.

Losses, he said, had included homeowners lodging mold claims under general water damage provisions of HO-B that were the result of "longstanding problems" from water leakage.

Mr. Hageman said the number of HO-B mold and water claims the company sustained in 2001 were unexpected and "huge," amounting to "over $300 million above the premiums it collected for these perils."

While Farmers was already offering the HO-A homeowners policy with replacement cost endorsements for the dwelling and personal property, the company said, addition of the endorsement (TX040) to the HO-A homeowners policy makes it more attractive to customers by adding immediate water damage coverage.

This includes coverage for sudden and accidental discharge, leakage, overflow or release of water or steam. (Three coverage limits of liability are available in the amounts of $5,000, $10,000, or $25,000).

Included as well is:

? The fall of trees or limbs, including felling, topping or trimming.

? Objects falling from the weight of ice, snow, or sleet.

? Collapse of the building or any part of the building.

? Breakage of glass, which is part of the building, including glass in storm doors and storm windows.

The endorsement also includes new or revised exclusions or limitations of coverage. The HO-A homeowners policy by itself covers damage from the most common perils including fire and lightning, windstorm, hurricane, hail theft, sudden and accidental damage from smoke or explosion, aircraft and vehicles, vandalism and malicious mischief, riot and civil commotion.

Although Texas Insurance Commissioner Jose Montemayor recently promulgated a new formula for homeowners policies that would allow insurers to charge more for protection against mold damage, Mr. Miller said the company saw it as "too little, too late for us."

Farmers is the second-largest group of property-casualty insurers in Texas. Los Angeles-based Farmers Insurance Group of Companies is the nation's third-largest group of home and auto insurers.