TOXIC MOLD
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Chaetomiumglobosum
80 different species of this fungus have been seen on building interiors, plant debris or soil.
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Alternia
Alternia is most often found on plant matter and has been found to provoke severe hay fever symptoms as well as pneumonitis and exacerbated asthma.
Conditions Conducive to Toxic Mold Environmental Risk
Any exposure to flooding, whether because of a structure's location in an established high-risk flood zone or because of unanticipated exposure, can be followed by significant risk of mold. Structures in humid conditions are more prone to mold developing. It's no accident that the bulk of claims for mold damage originate in states like Florida, Texas, and Louisiana, but even places like Portland, Oregon or Seattle may have higher mold damage claims than in drier climates. As might be expected, some structures more prone to developing mold and toxic mold are greenhouses, flower shops, saunas, farms, and summer cottages, but construction zones and antique stores may also be at higher risk.
What Is Toxic Mold? Definitions Mold Remediation
Any method to clean mold and prevent its recurrence is known as mold remediation. In recent years, it has also become a burgeoning business that specializes in clean up after mold damage to walls, ceiling, carpets, etc. Mold remediation -- as a business -- is controversial. It has been touted as the "asbestos of the 21st century" with regard to both anticipated legal actions and to the widespread need for firms that specialize in remediation, but that has not yet been fully realized. Most sources of expert advice conclude that hiring a contractor who specializes in mold remediation is unnecessary for most smaller clean ups but that a large or difficult job may require the expertise of a mold remediation service. The first conflict during an insurance claim that involves toxic mold may be the insistence of the customer that a mold remediation contractor is needed and demand insurance coverage for the full amount of remediation. A mold remediation contractor, in turn, may seek insurance protection against claims that mold recurred after remediation efforts.
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Aureobasidium Pullularia
Aureobasidium Pullularia is a yeast-like fungus commonly found on caulk or damp window frames in bathrooms and on exterior siding which may be pink or black in color. Its growth form is yeast-like and its spores only become airborne through mechanical disruption of contaminated materials or aspiration of contaminated water. Pullularia occurs indoors in areas of free water, such as condensate pans, areas that aren't allowed to dry such as shower curtains or tile grout, and often appears in the aftermath of a flood.
History of Toxic Mold Claims, Part 1
Awareness of toxic mold and its impact on insurance, law, regulation, and popular culture can be traced back to two signal events: a report issued by the Centers for Disease Control and Prevention (CDC) in 1995 and the 2001 decision in the court case of Ballard/Allison vs. Farmers Insurance Group (The Ballard Case). The two events helped set in motion numerous additional insurance claims, lawsuits, reports, investigations, newspaper articles, television news reports, building evacuations, and a new industry. The repercussions continue to the present day.
Toxic Mold and Insurance Definitions Anti-Concurrent Causation Clause
Faced with unfriendly court decisions, insurers, in turn, added even clearer clauses, known as ''anti-concurrent causation clause,'' (ACC) with the aim of excluding a mold claim ''regardless of any other cause or event contributing concurrently or in any sequence to the loss.'' In other words, damage that is caused by both covered and excluded perils (either in a sequence whereby a covered peril sets in motion events that result in an uncovered peril or when both covered and uncovered perils happen at more-or-less the same time) is NOT covered. If any cause of loss falls within a policy exclusion that is accompanied by ACC language, the loss will be excluded, regardless of whether the "proximate" cause was unexcluded. Unlike the "absolute exclusion provision," insurers have been relatively successful in enforcing this clause.
Indirect (Third Party) Claims Medical Claims
For the past few years, widespread media coverage and highly visible lawsuits have caused many people to experience fear, anxiety, and what is often seen as overreaction when confronted with indoor mold. Not all mold is potentially hazardous to human health, however, and some people are more susceptible than others to adverse health effects from toxic mold. In some instances, individuals are totally unaffected. Others have reactions such as cold symptoms and pulmonary problems which abate once the irritant source is eliminated. Federal and state governments, lacking a scientific basis upon which to determine health risks, have abandoned the playing field almost entirely. Unlike asbestos or lead paint, areas in which the government stepped in to set health-based standards and regulate the conduct of affected individuals and industries, there is currently insufficient information in the mold field to make such determinations. Science has not kept pace with the need for "safe" standards. Legislative proposals in both the federal and state arenas have continued to languish. There is no federal legislation and only one state, California, has enacted toxic mold legislation specifying a health risk. In order to pursue a third-party medical claim, the claimant has to establish that mold could have caused such an injury as a general matter and that it in fact caused the particular plaintiff's injury. Causation is established through expert testimony. Because the science is new and the standards are unset, causation is difficult and may not succeed in trial. However, it often means a defendant who is invoking his liability insurance coverage must go through discovery and perhaps a trial, rather than getting out of the case by an early motion to dismiss, so the costs may be substantial even when an injury isn't proven due to toxic mold exposure. Claims are filed by tenants, clients, parents of affected children, homeowners, and employees (including government workers) where workers' compensation may also be implicated.
Mold Remediation and Insurance Mold Remediation Contractors
If a mold outbreak is large, difficult to access, or requiring demolition and reconstruction, an outside contractor may be advisable. And the insured is almost certain to want the insurance policy to pay for this service. The business of mold remediation is fairly new and not altogether reliable. An article from 2004 in the Wall Street Journal noted that there were no such businesses five years earlier but that by the time of that writing, there were 10,000 to 20,000 companies that specialized in mold removal and repair. There are reputable contractors who will perform mold remediation service. It's also evident that some contractors rely on "scare tactics," inflation of risk estimates, and spurious science to increase business. There are no licensing standards for a mold remediation contractor. If use of a contractor can be avoided, that's usually the best course. If a contractor is needed and insurance has accepted liability, it's best to have an ongoing relationship with the contractor to avoid making an unpleasant situation worse through spurious claims and charges.
Direct (First Party) Claims Restrictions
In recent years, insurers have also begun adding insurance policy riders limiting their obligations in the event of a mold infestation. The emergence and utility of these exclusions and restrictions can be seen, for example, in the case of Moore v. Safeco Ins. Co. of America, 2013 WL 6489955 (9th Cir. 2013). In this case, Safeco had renewed a homeowner's policy in 1999 that included a "clear and conspicuous provision" under which fungi-related loss or costs were completely excluded. Then, in 2002, the policy was again modified with a "clear and conspicuous provision" providing an exception to the exclusion of fungi-related loss or cost - i.e. if there was a covered loss under the policy, then the insured would be paid up to $10,000 for fungi-related loss or cost. When the Moores discovered mold in their home, Safeco paid a total of $18,702.67 ($10,000 for the mold and $8,702.67 for the water damage that constituted the "covered claim" under the policy). The Moores sued, asserting that they should be fully covered for the mold loss, and not limited to $10,000; that the 2002 policy modification did not limit, but added $10,000 of coverage specifically for mold remediation. The court disagreed (and this was upheld on appeal) and found that the policy was clear and unambiguous relating to the mold limits in the policy. The $10,000 payment was ruled sufficient. As in many cases, absolute exclusions were not enforceable in this case, but restrictions were.
History of Toxic Mold Claims, Part 2
It became clear after the 2001-2002 Ballard case decisions that insurers, regulators, and legislators were unprepared for toxic mold claims. By 2004, it was estimated that over 10,000 toxic mold court cases were pending. Insurance companies began to write specific exclusions, restrictions, and endorsements covering mold remediation.
Indirect (Third Party) Claims Errors and Omissions Claims Bad Faith Claims
It should not be forgotten that the first large court damage assessment for toxic mold (Ballard) was actually a "bad faith" judgment. Typically, to pursue a bad faith claim, the insured must show that the insurer did one of the following... (1) misrepresented facts or policy rights/conditions; (2) did not act quickly enough; (3) unjustifiably denied the claim; or (4) made a deficient offer of settlement. As an insurance producer, be forthcoming and responsive with clients about mold exclusions. Honest, timely and complete responses and disclosures and well as prompt action is vital when dealing with toxic mold coverage. Grounds for a bad faith claim may include the following... 1) failing to promptly contact the insured once the loss is reported; 2) failing to pay the insured amounts due under the insurance policy within 40 days of the loss, which constitutes an unreasonable delay in paying the insured's claim as a matter of law; 3) failing to provide the insured with a reasonable written explanation for the delay in resolving his or her claim; 4) adjusting the claim contrary to and in violation of its own water and mold or property claims adjusting guidelines; 5) assigning claim representatives to adjust the claim who are untrained and inexperienced in mold, and who make numerous misrepresentations to the insured; 6) not attempting in good faith to effectuate a prompt, fair, and equitable settlement of the claim, a claim in which liability is reasonably clear; 7) without proper cause, wrongfully and knowingly refusing to reimburse the insured for certain losses, and delaying payment on other losses which it acknowledges are covered under the insurance policy, such losses including additional living expenses and dwelling and other structural repairs and replacements; 8) forcing the insured to retain legal counsel to investigate his or her claim and to file a lawsuit to recover the benefits that should have been immediately forthcoming under the insurance policy; 9) failing to acknowledge with reasonable promptness pertinent communications with respect to the claim; 10) failing to provide the insured with reports prepared by experts, despite repeated requests for the same; 11) willfully refusing to undertake its coverage obligations to protect the insured, instead undertaking a continuous effort to conceal material information from the insured, to procrastinate and delay at every turn, and acting to maximize its own financial interest at the expense and to the financial demise of the insured; 12) unreasonably delaying investigation or payment of the claim by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form; 13) refusing to pay the claim without conducting a reasonable investigation; and 14) failing to affirm or deny coverage of the claim within a reasonable time after having completed its investigation related to such claim. By being aware of the areas that can prompt a bad faith claim and by being responsive and informed about toxic mold, claims against an insurance producer can be avoided.
Direct (First Party) Claims Loss of Use Claims
Loss of Use as a result of a toxic mold outbreak isn't covered by a basic homeowner's or commercial insurance policy unless it is specifically included. The occupants of a residence affected by toxic mold may be advised to vacate the premises until remediation is complete. This can be a protracted process. Loss of Use can extend to a loss of income if the premises to be vacated are a rental property. As a result, loss of use can be a significant exposure for insurers with regard to toxic mold claims. In response, many homeowner's policies now contain specific exclusions. If there is not an absolute exclusion of this nature, however, loss of use may need to be covered as a part of a valid, covered peril under the principle of "proximate cause."
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Penicillium
Penicillium is a form of fungus which can produce a large volume of mycotoxic spores even if not prevalent in an area. It grows readily on walls, ceiling tiles, etc.
Toxic Mold and Insurance Definitions Pollution Exclusion
Pollution is Excluded
History of Toxic Mold Claims, Part 1 The CDC Report (1995)
Public furor over indoor molds began in 1995 when the CDC investigated a suspicious cluster (10) of infants aged six weeks to six months in Cleveland in 1993 and 1994, all of whom showed signs of AIPH (acute idiopathic pulmonary hemorrhage), essentially unexplained bleeding in the lungs of 10 infants. One of the infants died as a result of AIPH. The CDC, working with a local pediatric pulmonologist, compared the 10 infants suffering from AIPH with 30 age-matched control infants from the same area in Cleveland and found that the infants with AIPH were more likely to have come from homes with major water damage from chronic plumbing leaks or flooding, resulting in mold infestations. Suspicion focused on outbreaks in these homes of Stachybotrys chartarum (black mold). Although it had never previously been linked to human illness, black mold had been shown to produce a "mycotoxin" that caused gastrointestinal bleeding in animals who ate moldy grain. They issued a "preliminary" report suggesting a link. The investigators cautioned that more research was needed to prove a causal link between black mold and AIPH. Nevertheless, the report set off a firestorm of reaction. The American Academy of Pediatrics issued a statement entitled "The Toxic Effects of Indoor Molds" and published a handbook of pediatric environmental health that highlighted the dangers of indoor mold as likely to cause AIPH. CDC findings were cited in congressional testimony and the popular media. A preliminary CDC study was being taken as proof that toxic mold existed and was a clear and present danger to infants and possibly to any and all human life.
Toxic Mold and Insurance
The costs to insurers of covering mold damage is enormous. Water damage claims are the most common property claims filed in the United States. It's estimated that mold damage will often triple the cost of repairs from water damage, accounting therefore for billions of dollars of liability to insurance companies. It's hard to put a precise dollar figure on mold damage because most insurers don't separate mold claims from water-damage claims. About 22% of all homeowner's insurance claims result from "water damage and freezing," a category that includes mold remediation. At that time, the cost of the average water damage with mold claim was between $15,000 and $30,000, at least five times the average non-mold homeowner's claim. The legal issues and health concerns attendant on "toxic mold" adds to the size of claims, the immediacy of the need for remediation, and the invocation of "Loss of Use" as well as medical expenses provisions of insurance policies. The claims exploded so quickly from 2001-2003 that Farmers Insurance Group, for instance, considered leaving the Texas homeowner's insurance market completely. In response, insurers have sought to raise rates to cover mold remediation, write specific add-ons for mold coverage, or to exclude coverage for some or all mold-related damage.
History of Toxic Mold Claims, Part 1 Lessons From the Ballard Case
They point out that the case has been largely misunderstood as validation that toxic mold is a clear and present danger for which insurers must compensate policyholders. They state that Ballard was not, in fact, a "mold" case but a "bad faith" case:"Ballard won her case against Farmers because the Farmers employees admitted they lied to her and that the statement that 'Farmers gets you back where you belong' was 'just an advertising slogan.' The jury was clearly angered...Professional and knowledgeable claims handling should avoid litigation and charges of bad faith." Additionally, the Ballard decision stressed the dire importance of being completely honest with the insured. Giving the insured false reasons for why the payment of the claim is being delayed is a misrepresentation for which the insurer may be held liable. It is, therefore, crucial for the insurer to pay the claim as soon as it completes its investigation and it becomes evident that it is liable for payment. Furthermore, if the policy contains an appraisal provision, the appraisal process must be conducted as quickly and efficiently as possible, so as not to allow mold to continue to grow, during this time. Finally, FIE evidently held only $20,000 in reserve to pay the claim although their own appraiser demonstrated it would cost more. FIE based the reserve amount on its allegations of under-insurance but the company had not requested an increase in coverage from Ms. Ballard even after deciding in 1996 that coverage was inadequate. The basis they claimed for only having a $20,000 reserve was therefore dismissed. All these lessons and the decrease of the damage award from $33 million to $4 million had less impact on public perceptions of toxic mold and insurance than the profusion of articles and public hearings about the Ballard case and the dangers of toxic mold that ensued. The hoopla trumped the facts of the case. The above-cited New York Time Magazine article from August 2001, "Haunted by Mold" gave a vivid depiction of Ms. Ballard's suffering and how it can affect us all: "Since the Cleveland study was first released, other doctors have become convinced that there are mold risks to adults as well. ''We do know for a fact that mold is associated with cognitive impairment in some people,'' says Dr. Wayne Gordon, a neuropsychologist and professor of rehabilitation medicine at the Mount Sinai School of Medicine in Manhattan, and one of a small but growing group of scientists who have come to specialize in the health effects of mycotoxins. These doctors cannot yet say definitively how these toxins work and why they affect some people more than others. But they do know that victims of the toxins visit their offices every day, more this year than last year and that their problems range from minor memory loss to devastating cognitive failure.
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins
Toxic molds are a smaller group from within a small group. According to Advanced Mold Inspections, a mold remediation company, "There are approximately 400,000 types of mold,of which less than 100,000 have been named. Approximately 1,000 types of mold are found indoors across America. Less than 80 molds are suspected of causing some form of illness, and only a few of them are considered toxic." In other words, only a few species of mold-producing fungi grow on and in structures in the United States, and only a few of these are given the "toxic" label. Furthermore, in every instance, it's not the mold itself which is considered toxic or to have deleterious health effects, but the spores they produce and release into the air and the gas which they emit as a byproduct of digestion. In particular, a few species among those that grow on and in structures produce spores that contain "mycotoxins" (myco=fungus; toxin=poison). These are spores which, if breathed, touched, or ingested might interact with our health in adverse ways. Mold spores are the system fungi use for propagation and are, in essence, a hardened shell containing material sufficient to create a new outbreak of fungus elsewhere.
Indirect (Third Party) Claims Medical Claims New Insurance Policies to Deal with Mold
Traditional Commercial General Liability (CGL) policies now routinely exclude coverage for toxic mold and mold remediation or liability for damage due to mold. Some insurers have opted to provide coverage for mold to contractors under pollution legal liability (PLL) policies or contractors pollution liability (CPL) policies, expressly extending the definition of "pollutant" to include "fungi" bacterial matter that produces the release of spores or the spreading of cells, including mold, mildew, and viruses. One such policy states that it covers contractors for damage "due to mold, legionella, and low level radioactive matter or waste, bodily injury including medical and environmental monitoring, and remediation expense, including both clean-up to the extent required by law and in absence of such laws to the extent recommended by an environmental professional." However, it appears that such coverage may be provided only through a relatively small sublimit. Alternatively, in order to obtain a higher limit, an additional premium may be charged on a case-by-case basis. Still other carriers may not offer such coverage or enhancements at all. The other response to toxic mold insurance requests is to offer contractors a discount on CGL policies when they use mold-resistant construction materials and paint.
Conditions Conducive to Toxic Mold Sick Building Syndrome
As building standards and methods have focused on energy conservation by way of sealing buildings more completely from outside air, a new pattern has emerged termed "sick building syndrome." The term itself was first coined by the World Health Organization in 1986 as new construction methods, starting in the 1970s, began to show signs that occupants (particularly in businesses) were showing a variety of symptoms that might be due to toxins recirculated through a building's HVAC system. Circulation with outside air, that might dilute this effect, was reduced. Sick building syndrome has also been cited as likely to either encourage an infestation of toxic mold or multiply its impact. Buildings that use "green" construction methods may seal in moisture along with the other elements of the atmosphere in the building, fostering mold growth. Any spores released by toxic mold would be effectively dispersed throughout a structure, then recirculated endlessly. Older buildings may yield more insurance claims for mold damage, but newer buildings that use energy-efficient architecture may be more likely to incite litigation along with insurance claims.
Indirect (Third Party) Claims Errors and Omissions Claims
As insurers increasingly find ways to avoid paying for toxic mold claims and third parties find ways to avoid liability, claimants who feel their losses should be covered are often tempted to blame poor advice from agents and producers that allowed them to be exposed to uncovered losses. As a producer, it's vital that you emphasize to your clients the need for prevention, maintenance, and rapid response when encountering mold. After a claim is filed, discuss (and document) the options for remediation and help find the means for complete repair and restoration. Given the current case law upholding insurance policy exclusions or restrictions on toxic mold claims, an errors and omissions claim may be easier to pursue than a direct damages claim. As one article stated, "Damages from toxic mold have created unprecedented professional errors and omissions loss exposure for insurance and risk management advisers...[for] the mold and pollution loss exposures the risk advisers were negligently leaving unaddressed in their customer base. In addition to uninsured toxic mold property and liability claims, legal expenses, personal injury, and bad faith claims for failing to advise, recommend, and/or procure the proper insurance against mold and mold-related losses for their clients can result in massive E&O claims. Professional liability insurance may not cover these claims. As the same article cited above points out, these are blocked by stern policy exclusions: "The new mold and environmental related damage exclusions on the risk adviser's professional liability policies are unusually onerous. Not only do they exclude claims for current activities, they exclude everything the adviser has done in the past that leads to an uninsured claim today." The article delineates five essential steps an agent can take to protect himself or herself against an E&O claim with regard to toxic mold coverage. These steps are... 1. Establish the scope of work to be undertaken on behalf of each client. 2. Advise clients about their exposure to loss by determining the environmental risks specific clients face. 3. Advise clients about insurance that is available and how the environmental exclusions in certain insurance policies can leave them uninsured for particular losses. 4. Recommend the purchase of and, if applicable, offer to procure for clients the appropriate insurance as it becomes available in the marketplace. 5. Complete the work by providing clients with written statements, which will document the activities and the client's responses.
Direct (First Party) Claims Medical Claims
As of this writing, the science on mold toxicity and causation of ailments is unsettled. Public health experts say it could be years before research proves or disproves whether certain molds (and there are hundreds found indoors) cause the kind of severe health problems being alleged in recent litigation. In some instances, Stachybotrys chartarums (black mold), the most notorious of the potentially so-called "toxic molds," has been blamed for a range of physical ailments. Unlike many other known toxins, such as lead, mercury, or cadmium, there are no standards for levels of mold toxicity and no known permissible mold exposure limits for indoor environments. No state or federal agencies currently offer testing of mold samples. When denials of coverage for medical claims other than asthma related to toxic mold have been challenged in court, the suits have almost always been dismissed on the grounds that the science is not yet proven. [i.e. Minner v. American Mortg. & Guar. Co., 791 A.2d 826 (Del.Super. 2000)] Therefore, insurance liability for medical claims as a result of toxic mold are limited and principally only relevant for asthma or exacerbation of pulmonary disorders.
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Aspergillus
Aspergillus is one of the most common varieties (over 150 species) of household fungus, adopting a wide gamut of colors and manifestations when affecting foods, cloth, or even animals or bacteria. It is associated with Aspergillosis, an infection that affects those who suffer from asthma or other respiratory diseases.
Indirect (Third Party) Claims Medical Claims Damage Claims
Causation often will be easier to establish in the property damage context than in the personal injury context. Mold damage to a structure is demonstrable and doesn't require expert testimony.The basis for a third-party damage claim is different from that for a first-party claim. In a direct claim, the issue to be resolved is whether the mold is secondary to a covered peril. In a third-party claim, the issue to be resolved is whether the mold is a result of faulty workmanship which was within the insured's own control. Insurance policies are not intended to cover defective work. On the other hand, it may be resolved that the damage that led to the mold was a result of defective components that were not in the control of the insured or an occurrence or event that could not have been foreseen by the insured. Errors by subcontractors (such as a screw that penetrated a water pipe that wasn't discovered until mold had developed as a result) are not in the control of the insured.
Mold Remediation and Insurance Insurance and Lawsuits
For a customer who believes the response from an insurer regarding toxic mold was inadequate, resort to legal action is not uncommon. Despite the best efforts and good faith on behalf of all parties, disputes about insurance coverage of toxic molds can be volatile and protracted. Remember that the last step of remediation for toxic mold might be a better policy or better coordination of coverage; or it might be the settlement in a lawsuit. The best remedy is one in which mold clean up is done quickly, thoroughly, permanently, and to everyone's satisfaction at the lowest possible cost; not in the courtroom.
Direct (First Party) Claims Covered Perils vs. Policy Exclusions
For the past three decades, insurers and policyholders have litigated the critical question over whether fungus, mold, rot, and the like are covered perils under the policy, notwithstanding the fact that insurers, faced with increasing numbers of claims, have drafted specific exclusions to mold claims. Although the great majority of state insurance departments permit policy exclusions for mold, courts have been left to answer the question of whether the exclusions are enforceable. In the ongoing battle as to the enforceability of mold exclusions, most courts adopted some form of ''efficient proximate cause'' analysis to determine enforceability. Under this approach, a mold claim is covered if a different peril which is covered by the policy (a sudden pipe leak) ''proximately caused'' the mold contamination. Stated another way, the pipe leak, not the mold, is deemed to be the cause of the loss.
Conditions Conducive to Toxic Mold Toxic Mold & Chinese Drywall
From 2001 until 2008, gypsum board from a Chinese firm called Knauf-Tianjin was used to build and renovate residential properties all across the country. Over six million sheets of drywall were imported from Knauf-Tianjin according to the Consumer Product Safety Commission (CPSC) and as many as 500,000 homes used at least some of the sheets. Nearly 4,000 complaints from 42 states were filed with the CPSC about this drywall, particularly on homes were built between 2006 and 2007, alleging headaches, asthma attacks, nosebleeds and respiratory problems; 11 deaths were also linked to the presence of toxic substances within the drywall. Although it was accepted that the drywall was implicated in many of the symptoms, there was no definitive link to the fatalities. The precise cause of the symptoms is unclear. Since an overwhelming number of claims occurred in locations with high heat and humidity (mostly Southeastern states), toxic mold was widely suspected. Claims customarily cited "a strong smell of rotten eggs," which could imply mold contamination. The drywall caused physical damage to the homes in addition to the possible health risks. Significant corrosion of the metal used in electrical fixtures, appliances, plumbing and air conditioning units was apparent. Obviously, these conditions lower the resale value of the home and create additional repair expenses. Claims were lodged against builders, suppliers, and insurers in response to the problems with Chinese drywall.
Mold Remediation and Insurance Cleaning
If a mold outbreak is relatively small (less than 10 square feet), it's recommended that the owner clean it without hiring an outside contractor. If the area is large or partial demolition seems required, an outside contractor can be useful.
Mold Remediation and Insurance Cleaning Avoid Long-Term Problems
If there are any symptoms that could be a result of exposure to mold spores, consult a physician. For mold exposures that aren't in your home or if you are a renter, contact the owner or responsible party and advise of the need for clean-up. Local building codes or enforcement options may exist to impel clean-up. As an insurer, you may also be called upon to pay for replacement of damaged items or structures rather than attempt to clean them. Some items or elements may not be salvageable once contaminated by mold. Replacement with non-cellulose based materials can prevent renewed fungal growth. An insurer may also require replacements (whether with mold-immune materials or not) in order to continue coverage.
History of Toxic Mold Claims, Part 1 The Ballard Case Settlement
In May 2001, the jury found in favor of Ballard that FIE had acted in bad faith and awarded approximately $33 million in damages. This included $12 million in punitive damages, $5 million for Ms. Ballard's "mental anguish," and nearly $9 million in attorney's fees. The jury awarded over $1 million for mold remediation as well as nearly $4 million to replace the home and its contents in addition to payments for living expenses when away from the home. The size of the award, the provocative term "toxic mold," and the vivid personality of Melinda Ballard (who founded an organization, Policyholders of America, dedicated to pursuing insurance companies that paid less in claims than the insured felt they deserved) conspired to capture headlines and initiate a chain reaction. A tropical storm that struck Texas just days after the May 2001 verdict amplified the concerns of fellow Texans that they, too, could face the scourge of toxic mold. Attorneys and journalists began to call toxic mold the "asbestos of the 21st century," anticipating that the response to indoor mold would duplicate the kind of jury awards, regulation, and massively expensive clean-up costs that asbestos had caused. "The Mold Rush" or "mold is gold" began to circulate as sayings among those hoping to profit from popular hysteria about toxic mold. In 2002, the Texas Appeals Court reduced the damage award in the Ballard Case to $4 million, stripping all but the indemnification elements.
Indirect (Third Party) Claims
In addition to attempts to have toxic mold claims handled directly by insurance, insurers are targets of third-party claims from various entities, such as builders, contractors, engineers, architects, sellers, inspectors, building owners, managing agents, and even product manufacturers such as lumber companies or roofing companies. In most cases, these entities are the target of attempts to prove improper use of materials, improper construction techniques, defective materials, or inadequate maintenance when maintenance is not the responsibility of the occupant. Water infiltration that causes mold to grow can severely damage a building and make its occupants feel ill. Often major litigation ensues-as happened in a case involving the Tulare County Courthouse in Visalia, Ca., built in the late 1980s. Led by a state district judge, county employees filed suit against the county, seeking damages for personal injury caused by exposure to mold in the courthouse. The trial court held that the county was liable to the employees only for aggravation of their injuries caused by alleged fraudulent concealment of the condition of the courthouse. In this situation, however, (as often happens) the employees also sought other potential defendants in the designers, contractors, and subcontractors who worked on the building. Each of these third parties may either try to invoke existing insurance coverage to pay for their liability or to seek new or additional coverage to protect against future liability claims.
Toxic Mold and Insurance Definitions Restrictions of Coverage Clause
In an attempt to avoid legal challenges at the same time that the insurer is shielded from spurious or inflated claims, almost all currently enforced insurance policies that allow for any mold remediation coverage set a limit on covered damages. The restriction of coverage clause may be presented in language similar to: "We will pay up to $10,000 for: (1) The total of all loss payable under Section I - Property Coverages caused by "fungi", wet or dry rot, yeast or bacteria; (2) The cost to remove "fungi", wet or dry rot, yeast or bacteria from property covered under Section I - Property Coverages; (3) The cost to tear out and replace any part of the building or other covered property as needed to gain access to the "fungi", wet or dry rot, yeast or bacteria; and (4) The cost of testing of air or property to confirm the absence, presence or level of "fungi", wet or dry rot, yeast or bacteria; whether performed prior to, during or after removal, repair, restoration or replacement. The cost of such testing will be provided only to the extent that there is a reason to believe that there is the presence of "fungi", wet or dry rot, yeast or bacteria." Note that the cost of testing is not separate from but is incorporated into the overall limit. Also note that medical costs and loss of use are not included in the restriction. Courts have generally respected the right of insurers to limit their exposure to mold damage claims except where errors and omissions can be demonstrated. In other words, restriction of coverage clauses have been enforceable.
Indirect (Third Party) Claims Medical Claims Real Estate Claims
In order to avoid claims from buyers who felt they were sold properties already mold-infested, all real estate contracts in recent years include representations and warranties that the premises currently display no evidence of water infiltration or water damage and display no evidence of conspicuous mold growth. Claims against brokers or sellers must prove that due diligence was not performed or that misrepresentations were made and insurance to protect against these types of allegations of misconduct by real estate agents is not generally available.
Direct (First Party) Claims How to Handle Direct Mold Claims
In order to establish a valid claim, it is generally necessary to establish; 1) Is mold excluded under the absolute pollutant exclusion? 2) Did the mold damage result from a covered cause of loss? 3) Did the mold damage commence prior to or subsequent to the policy's effective date? 4) Did negligence by the policyholder or a third party cause the problem? 5) Did the policyholder give sufficiently prompt notice of the events giving rise to the claim? Time is critical in responding to water damage. Mold starts to develop quickly. Policyholders need to give insurance companies prompt notice of a loss and take steps to prevent further damage; in fact, most policies require this. Insurers also need to be able to inspect the premises in a timely manner. The issues of mold toxicity and remediation are scientific issues. Insurance companies are not public health experts or officials. The scientific experts themselves have not reached a consensus on many key mold-related issues. Certainly, insurers cannot and should not reasonably be expected to act as experts in this area. Homeowners who engage a mold remediation contractor - as well as any other providers of professional services -- should take the time to carefully review their credentials and experience. There are currently no generally accepted mold remediation standards, and no licensing or professional requirements for someone who says they can remove mold. Even if, as an insurer, you don't directly engage a mold remediation contractor and may not even pay for the service on behalf of a claimant, it is advisable to develop and maintain relationships with reputable contractors that you can suggest for claimants. While indoor air quality investigations have an established protocol and guidelines, mold remediation is a new industry. There are no government-mandated guidelines for proper mold remediation. A subsequent claim for mold in a structure that has undergone mold remediation may rest on whether the owner has pursued appropriate maintenance and mold prevention protocols after the earlier outbreak.
Toxic Mold and Insurance Definitions Stand-Alone Mold Remediation Policies
In some cases, an insurer will deny access to a mold remediation rider to a basic policy because the risk is too great. Stand-alone mold remediation policies are available from a few specialty companies (such as Unitrin) but the premiums are substantial. Annual premiums for a standalone mold policy might range from $5,000 to $25,000.
History of Toxic Mold Claims, Part 1 The Ballard Case
In the meantime, in May 1999, a homeowner in Dripping Springs, Texas filed a lawsuit against her insurer (Fire Insurance Exchange (FIE), a member of the Farmers Insurance Group) for bad faith regarding a mold remediation claim. The history of the case is this: Melinda Ballard had bought a very large, poorly maintained house in a suburb of Austin (about 200 miles north of the Gulf in the appropriately named town of "Dripping Springs") for $275,000 in a foreclosure sale in 1990. She married Ron Allison in 1994 and they had a son, Reese, in 1996. Ms. Ballard purchased a homeowner's insurance policy for the home from FIE in 1992 which by 1999 insured the structure up to $313,000 and the contents up to $187,000. After filing claims for damage related to various plumbing leaks in 1996 and 1997 for which FIE paid over $60,000, Ms. Ballard filed an additional claim for damage due to plumbing leaks in late 1998, which FIE disputed after their investigator found no leaks. FIE also found the home (which they valued at $749,000 for the structure and $450,000 for the contents) massively under-insured and withheld some subsequent payments on that account. Ms. Ballard continued to pursue the claim and hired an attorney in March 1999. During this same period, according to a later feature article in the New York Times Magazine the family began to show suspicious symptoms. "Reese Allison developed asthma. Melinda began having dizzy spells. The family visited a variety of doctors a total of about 50 times over a three-month period. Ron Allison had the strangest symptoms. He would forget simple things like where he left his credit card or where he parked his car, or even what kind of car he owned. His co-workers would find him at his desk looking as if he were in a trance." Ms. Ballard's plumbing inspector found a large infestation of black mold behind a leaky refrigerator in April 1999. On April 23, 1999, an "indoor air specialist," Bill Holder, whom Ms. Ballard had met by chance on an airplane, inspected the home and told the family to move away immediately due to a toxic mold infestation. FIE subsequently paid nearly $80,000 in new water damage claims, but a dispute arose about mold remediation which FIE estimated at $382,000 and the Ballard's contractor priced at over $1 million. FIE issued a check for $382,000 in August 1999 which was initially rejected by Ms. Ballard's attorney, then held in escrow, pending a final settlement.
History of Toxic Mold Claims, Part 2 Insurance Policies and Toxic Mold
Insurance companies responded to the "Mold Rush" by writing new exclusions and restrictions into policies. A 2003 report entitled "The Risk Adviser's Guide to Mold Exclusions" states damages from toxic mold have created unprecedented professional errors and omissions loss exposure for insurance and risk management advisers. Toxic mold claims are much more frequent than either asbestos or Superfund claims. Insurance companies have taken the lessons learned from their dismal experience with asbestos and Superfund claims and have moved proactively to exclude mold claims from all property and liability policies. To completely shut the door on their exposure to toxic mold claims, professional liability underwriters are adding mold and even new pollution "related" damage exclusions to insurance agents' professional liability policies. With insurance available to cover environmental damages including covering mold as a pollutant on commercial accounts and the availability of buy backs for mold damages on homeowner's insurance policies, professional liability underwriters wisely did not want to become the insurers of last resort for the mold and pollution loss exposures the risk advisers were negligently leaving unaddressed in their customer base. The report estimated 150,000 mold claims in the prior two years totaling $4 billion in charges, compared to 500,000 asbestos claims over 20 years with charges totaling $20 billion. Starting at about this time, mold remediation that was not connected with another covered peril (such as a broken pipe) was expressly excluded from coverage. In addition, specific limits were newly written into homeowner's insurance policy with regard to mold remediation and repair if it was connected to another covered peril. The limits varied but were generally between $1,000 and $10,000 for any mold remediation as a part of an overall insurance claim. Mold as a result of flooding was specifically excluded, similar to the other elements of damage due to floods already specifically excluded. Some companies have even tried to write exclusions to coverage for any mold remediation, even if connected to an otherwise covered peril. As one article in 2013 states, "Insurance companies are getting tired of mold too. Even if your insurance does cover some water damage, many companies now explicitly limit or completely exclude coverage for mold-related damage, regardless of the source." It's estimated that mold remediation will triple the cost of repairs subsequent to water damage. Insurance companies have tried to shield themselves against such charges. Absolute exclusions of coverage for mold remediation continue to exist in some policies although they have often failed when challenged in court.
Direct (First Party) Claims Exclusions
Insurance policies are contracts. They expressly cover losses caused by certain perils and explicitly exclude losses from other perils. Typically, standard homeowner's policies do not cover water damage caused by "maintenance" problems. These include slower, ongoing problems like continuous water seepage or repeat leaks, ongoing humidity problems, problems related to landscaping or drainage on the property, or condensation. If there has been no inspection of pipes and other sources of water damage for a lengthy period, coverage may be denied on that basis. Exclusions may be based on a design or construction defect or damage caused by rust, corrosion, decay, hidden or latent defect, and/or pollution. Any slow-developing problem such as mold that develops gradually over a long period of time and can't be ascribed to a discrete event (an event that took place during a brief or relatively brief period) is excluded much as any long-term wear and tear would be excluded. Additionally, unless they are specifically covered, sump pump or sewer-related damage is most likely excluded. Almost all homeowner's policies exclude flood damage or mold infestations that occur as a result of flooding.
Toxic Mold and Insurance Definitions Endorsements for Mold Remediation
Major insurance companies do not write specific "mold insurance" policies for homeowners or businesses that allow for direct claims. Instead, companies generally write exclusions and restrictions on mold coverage, then offer "buy-backs" (also known as riders, endorsements or add-ons) to basic policies. Premiums on these buy-backs will vary based on location and the value of the house, but are generally $500 to $1,500 a year for a rider on an existing policy. Prices tend to climb in humid southern climates, and in Texas and California, where there have been high-profile mold cases. In general, older homes in humid climates where mold thrives will be more costly to insure than newer constructions in a dry climate. In particular, homes built within the past five years are likely constructed with mold-resistant wood, drywall, and paints and therefore have lower premiums. National Flood Insurance also offers a rider to cover mold remediation.
Toxic Mold and Insurance Definitions Absolute Exclusion
Many policies issued in the past decade have included a blanket denial of coverage for a specific loss from mold damage or from health impacts of exposure to toxic mold. The language of the exclusion will be similar to: "The policy will not cover damage due to rust, corrosion or mold. This insurance does not apply to bodily injury or property damage arising out of or contributed to by any fungus, mildew, mold, or resulting allergens. Neither does it cover any costs associated with abatement, mitigation, remediation, or containment of mold." Courts have regularly ruled that an absolute exclusion provision is only valid when an efficient proximate cause is not present. In other words, when toxic mold was caused by a covered peril, courts have ruled that mold remediation must also be covered in defiance of the policy's exclusion of such coverage (for example, Nationwide Ins. Co. v. Walen, 2011 N.H. Super. LEXIS 49 [N.H. Super. Ct. 2011]). Courts have been particularly harsh when delays caused by insurance denials of coverage allowed the fungal infestation to worsen.
What Is Toxic Mold? Definitions Mold
Mold is a term used to commonly describe the discolored, often woolly contamination that occurs on damp or decaying organic matter when a fungus grows on it. Under a microscope, the fungus would look like a colony of tiny mushrooms. Fungus is characterized as a "kingdom"; distinct from either the plant or animal kingdoms. It's also called "plant-like" and commonly including within the study of botany despite the distinct taxonomy of fungi. The study of fungi, itself, is known as "mycology." More than a million species of fungi have been isolated, including yeasts and mushrooms. The fact that mushrooms are a fungus and can have fatal consequences if ingested may have influenced the reaction to so-called "toxic molds" on walls. Mold is, however, ubiquitous. There is no environment so antiseptic or clean that mold spores can't be found. Fungus may be present in small quantities in areas that seem entirely clear. Major outbreaks, on the other hand, are not hard to spot. Fungi do not possess chlorophyll, so (like animals or bacteria) they must absorb food from other sources. They generally consume dead organic matter, such as leaves, wood, cloth, cardboard, and gypsum. Some of the matter is digested and the remainder is ejected as a gas which, since it is composed of decaying matter and compounds unpalatable even to fungus, have a characteristic noxious odor. Gasses detected from fungal infestations include carbon dioxide, hydrogen cyanide, ethanol fumes, and various alcohols. Only when the fungus is abundant will the gas accumulate enough so that the smell will be noticeable. Since fungi do not use light to make food but need moisture to survive, they will most often be seen growing in damp and dark places. There are a few forms of mold that are not caused by fungus, but a preponderance of molds are fungal in nature and only fungal molds have earned the title "toxic mold."
Conditions Conducive to Toxic Mold Older Buildings
Older buildings are more often at risk of developing mold or toxic mold. Deteriorating roofs, exterior walls, floors, pipes, and foundations can all provide opportunities for water to infiltrate a structure. In some cases, older building materials and/or paints were not treated to inhibit mold growth, putting the structure at greater risk. In addition, stucco construction puts structures at greater risk of fungal infestation. This doesn't mean that newer buildings are immune to indoor mold. As noted, below, newer buildings can be more at risk of higher concentrations of mold contaminants, resulting in "sick building syndrome."
Harmful Effects Toxicity
Once again, the term "toxic mold" does not imply any fatal effects from exposure. Attempts to connect mold exposure to cancer are also unproven at this time (and not widely accepted). Nevertheless, being forced to live, work, or go to school in proximity to mold infestations is unpleasant. Clearly, it should be avoided so long as there are any harmful health effects, no matter how negligible. Future studies may uncover more serious health risks. Caution is advised, regardless of current understandings of the risks involved. If a client feels a need to vacate a covered property until mold remediation is complete, that may become an issue, since the Loss of Use provision of their policy may not cover this expense. Furthermore, an insurer may be more likely to face punitive damages if there's any attempt to diminish or reject a customer's concerns about the harmful impact of "toxic mold." Statements to an insured that there's "nothing to worry about," with regard to toxic mold are, for example, ill-advised. The best practice is to provide your best understanding of the exclusions in the customer's current and prospective coverage, what policies or policy endorsements are available, and to neither promote nor dispute a customer's concerns about the toxicity of mold to which they've been exposed.
History of Toxic Mold Claims, Part 2 Legislation
Over 30 states have passed legislation aimed to protect consumers from the costs associated with toxic mold as well as to shield insurers from extravagant claims. California has been the most active in passing legislation to address toxic mold. Statutes vary but they often mandate that sellers disclose any mold infestations before selling a home or other structure. Other statutes direct that state OSHA and Departments of Public Health develop protocols to test for and ameliorate mold contamination. Many states also have passed statutes to amend the insurance codes to allow for specific exclusions to coverage for mold damage. Apart from legislation, some state Insurance Commissions have enacted standards that mandate limits for mold remediation claims (for example, the Alabama Insurance Commission now caps mold claims at $10,000). Courts have, at times, ruled that these statutes or codes unfairly limit a policyholder's legitimate claim. In addition, the U.S. Congress has proposed several bills aimed at creating a national policy for dealing with toxic mold, including a National Mold Insurance Program modeled on the National Flood Insurance Program, but the legislation has failed repeatedly. FEMA maintains some federal resources aimed at mold mitigation and remediation, but this is the limit of current federal programs aimed at the peril of toxic mold.
Direct (First Party) Claims What is Covered Under a Homeowner's Policy
Policyholders have made mold coverage claims under property, liability, homeowner's, builder's risk and other similar coverages. Insurance contracts provide coverage for property damage described in the policy and not otherwise excluded from the policy. Insurance policies are designed to cover fortuitous, sudden, and accidental losses. They do not create a home warranty, and do not reimburse policyholders for ordinary wear and tear, or losses that result from failure to maintain the home. The standard homeowner's policy insures against losses to property caused by fire or lightning, windstorm or hail, smoke, etc. It expressly excludes losses due to "wear and tear" or "smog, rust or other corrosion, mold, wet or dry rot." Under current practices, typical homeowner's policies will usually cover mold remediation if it is a result of sudden and accidental water damage such as burst pipes. While property insurance policies and coverage differ, courts have generally held that mold is covered if it is a consequence of a covered loss. Generally speaking, this means that mold caused by failure to maintain a home would not be covered, while mold caused by a covered peril would be covered. For example, if fire were a covered cause of loss, most losses that directly flow from this covered loss would be covered as well. An insurance policy is not intended to be a home warranty product. Just as insurance does not, and should not - as a matter of public policy - cover the costs of regular roof maintenance or plumbing maintenance, it does not and should not cover mold damage resulting from inadequate maintenance.
Mold Remediation and Insurance Prevention
Similar to other risks for which people seek insurance, prevention is the best way to respond to the circumstances that can lead to mold infestation. The Centers for Disease Control and Prevention suggests that using an air conditioner or dehumidifier in humid conditions can help to keep humidity levels as low as possible -- no higher than 50% all day long. They advocate for adequate ventilation, including exhaust fans (especially in bathrooms), for adding mold inhibitors to paint before application, to clean bathrooms with mold-killing products, avoiding carpeting in bathrooms, kitchens and basements, and replacing any previously soaked carpets or upholstery. Other suggestions are to install and maintain all-season attic and crawlspace ventilation systems, use exhaust fans whenever cooking or using an appliance that uses water, ensure proper drainage of landscaping away from the structure, clean rain gutters and drains, check any points of potential water incursion and repair it, respond to unusually high water bills by checking for leaks, turn off the water when traveling, etc. Look for areas of condensation and improve ventilation or seal the source of drafts. Even more importantly, mold will very likely occur wherever water has been allowed to infiltrate a structure. Proper inspection and maintenance of roofs, exterior walls, floors, foundations, pipes, and fixtures will prevent an initial outbreak of mold and help prevent any recurrence of past outbreaks. Inadequate maintenance is the predominant basis on which insurance claims for mold and toxic mold remediation are rejected.
Harmful Effects Health Risks
Some people are sensitive to molds. For these people, exposure to molds can cause symptoms such as nasal stuffiness, rhinitis (hay fever), eye irritation, wheezing, symptoms similar to colds or flu, dermatitis, or skin irritation. Nosebleeds and general malaise and fever have been reported as well. Some people, such as those with serious allergies to molds, may have more severe reactions. Severe reactions may also occur among workers exposed to large amounts of molds in occupational settings and may include fever and shortness of breath. Some people with chronic lung illnesses, such as obstructive lung disease, may develop mold infections in their lungs which can be very serious. In addition, there have been some attempts to link mental illness to exposure to "toxic mold," at least insofar as it may trigger or worsen pre-existing mental illnesses. There are no definitive studies that make this link.
Harmful Effects Structural Damage
The damage caused by mold and fungus to residences and businesses should not be underestimated. In addition to being unsightly and unpleasant, when mold has grown on walls, it may have also grown through the wallboard into the internal space of the wall. Mold growth on carpets and other items in a room can occur at the same time. These items may not be salvageable and must be replaced. If allowed to persist, mold can compromise structural integrity. In some cases, remediation may require partial demolition of an affected structure. Mold will reduce the market value of a home or business. In extreme cases, it will make a house essentially unsellable. In any of these circumstances, the insured will expect indemnification from an insurer which, in many cases, will not be forthcoming due to stated policy exclusions within the existing coverage.
Conditions Conducive to Toxic Mold
The molds associated with indoor environmental problems need particular conditions to develop. Fungi that affect structures grow on damp or wet materials containing cellulose, such as lumber, drywall, insulation, carpet and carpet pads, furniture, and other items which are sources of nutrients. Growth occurs when there is moisture from water damage, excessive humidity, water leaks, burst water pipes, condensation, water infiltration, or flooding. Constant moisture is required for the growth of mold-producing fungi. Generally, warm conditions that don't involve direct sunlight (which can dry out the area) promote the most prolific growth. An infestation can occur within 24 hours of exposure but most often will be seen within a few days to a week after exposure. There is no way to determine how long a fungus has been growing. Ascribing it to a given event or condition (for insurance purposes) relies on visual examination that establishes when a structure was unaffected, then became impacted. Although some fungi can grow for a period of time in a largely hidden substrate, when mold has affected a residence or business, it's usually obvious to even a casual observer. Visual evidence tends to be unambiguous and the characteristic musty smell of an affected area is unmistakable. The conditions that allow for mold to develop are key both for determining liability and for undertaking remediation. These conditions might differ, depending on location as well as the age and condition of the structure, but some conditions that foster the growth of toxic mold may be covered by insurance while others are not.
Mold Remediation and Insurance Cleaning Kill The Mold
The most common mold-killing agent is bleach (one cup per gallon in either a bucket or spray bottle). So, unless mold mutates to develop a resistance to bleach, it is easy to remove from most surfaces. Other agents that are chosen if bleach is not wanted include vinegar, Borax, hydrogen peroxide, and ammonia. DO NOT MIX ammonia and bleach; the combination is volatile. Cleaning non-porous surfaces such as floors, tubs, tile, and counters is relatively straightforward. Mold is fragile and even a thorough cleaning of a non-porous surface with warm water and soap may be sufficient (although at least a quick application of a mold-killing liquid is recommended). Porous surfaces like wallboard may look clean after an application of bleach-water or other cleaning agent, but the active mold-killing ingredients are only on the wall's surface while the water leaches into the wallboard, encouraging further substrate mold growth. A future outbreak is almost certain. There are some products specifically designed to either penetrate porous surface or to seal them so as to deny the conditions for further substrate growth. Otherwise, demolition and replacement of porous, moldy walls is needed.
What Is Toxic Mold? Definitions Mold Testing
There are firms which will conduct (and charge for) tests to identify molds. In point of fact, it rarely matters what type of fungus affects a structure. The factors that cause mold to appear, the need to clean it up, and the methods used to clean it up are the same for all species of mold-producing fungus. The nature of an insurance claim may be impacted by the particular fungal species. A claimant may assert that black mold, for example, had an effect that is unique to that species. However, for insurance purposes, there is never a need to test to determine what particular species affects a structure. The same precautions should be taken to avoid exposure, contain the damage, and repair the structure to make it mold-free (and to keep it that way). There are no federal standards for testing mold and no standards to determine what qualifies as a safe or unsafe level of mold contamination.
Mold Remediation and Insurance Cleaning Stopping The Cause Of Mold Growth
There's little point in cleaning if full effort isn't made to prevent a recurrence. Mold isn't mysterious or unpredictable. It needs specific inducements to grow. Where and how it develops is easy to anticipate. Cutting off the supply of moisture will remove the conditions that allow for mold to grow. Seal leaks, repair pipes, holes or gaps, anything that can let in water. Structural elements that have been saturated and can't be restored, including wallboard, insulation, studs, woodwork, carpets, upholstery, etc.may need to be repaired or removed and replaced. If repainting, add mold-blocking agents to the paint.
What Is Toxic Mold? Definitions Toxic Mold/Mycotoxins Stachybotrys Chartarum (or Stachybotrys Atra)
This is the one fungal infestation overwhelmingly termed "toxic mold." Stachybotrys chartarum is also called "black mold," due to its greenish-black appearance. It produces mycotoxins which have generated the most profound claims of deleterious health effects (up to and including cancer). The name "black mold" is an additional reason for its notoriety. Black mold can grow on any material with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dirt (for example, dirt that is atop masonry), and lint.
Toxic Mold and Insurance Definitions Efficient Proximate Cause
Under this approach, a mold claim is covered if a different peril which is covered by the policy (e.g., a sudden pipe leak) ''proximately caused'' the mold contamination. Stated another way, the pipe leak, not the mold, is deemed to be the cause of the loss so mold is covered along with repair of other damages due to the pipe leak. A notable case that established the primacy of "efficient proximate cause" for enforcing coverage of mold-related insurance claims was De Bruyn v. Superior Court, 158 Cal. App. 4th 1213, 1216 (2008)
Indirect (Third Party) Claims Medical Claims Insurance for Contractors (Including Mold Remediation Contractors)
Until 2004, CGL policies didn't have specific exclusions for mold and early mold remediation contractors were able to obtain coverage in case their work didn't fully or permanently end the mold infestation. Insurers sought to exclude coverage under the absolute pollution exclusion with variable results. The mold exclusion now a standard feature of CGL policies is essentially a total pollution exclusion for the specific pollutant mold. Mold exclusions may even eliminate the insurance for defense costs, which can be hundreds of thousands of dollars in a toxic mold case. CPL insurance is used to fill the gap in coverage in CGL policies. Contractors Pollution Liability was invented for hazardous waste contractors working on Superfund sites in the mid 80's to fill the gap in liability insurance coverage created by the Absolute Pollution Exclusion in CGL insurance. It is now a vehicle available to contractors liable for claims related to toxic mold.
Mold Remediation and Insurance Cleaning Protect Yourself And Other Areas
Wear gloves and a mask when cleaning mold. It may be wise to mask off uncontaminated areas. Remember, mold is spread by airborne spores, so containment is always a part of cleaning. Dead spores continue to have the same capacity for harm to the health as live ones.
Direct (First Party) Claims What is Covered Under a Commercial Policy
While the Insurance Services Office (ISO) has developed standard commercial property forms, these kinds of policies are often negotiated between the parties, and are tailored to suit the needs of the individual policyholder. Each policy is different. Some general conclusions are nevertheless evident. Commercial insurance policies provide coverage for property damage caused by a loss that the policy covers, i.e., one that is described in the policy and not otherwise excluded from the policy. Insurance policies are designed to cover fortuitous, sudden and accidental losses. The insurance policy does not reimburse a policyholder for ordinary wear and tear, or losses that result from failure to maintain the building, including mold infestations. As with homeowner's policies, the standard ISO commercial property policy therefore does not provide coverage for damage caused by or resulting from mold. However, while policies and coverages differ, courts have generally interpreted commercial property insurance policies to provide coverage for mold damage if it is a consequence of a covered loss. Restrictions on the total cost of mold claims may be included in the policy, with limits substantially larger than those in homeowner's policies. An agent or broker, it is vital that commercial policies are clearly explained and understood with regard to mold limitations and exclusions.
