Removing the hype from the issue of mold and indoor air quality is like removing a source of moisture from mold spores. Without the hysteria surrounding this issue, the financial incentives that feed unscrupulous businesses in the emerging mold economy will soon die out, according to David Golden, director of commercial lines at the National Association of Independent Insurers (NAII).
Golden, speaking before the Institute for Environmental Assessment’s Midwest Conference and Symposium on Indoor Air Quality in Bloomington, Minn., explained how the insurance industry is responding to the increased activity involving mold-related water damage claims.
“Once the considerable hype regarding the impact of mold on indoor air quality is cleared away, a few simple facts remain — mold growth can generally be prevented or controlled with routine maintenance and proper remediation techniques,” Golden said. “Prevention! Prevention! Prevention! This is the message that the industry emphasizes to homeowners and property managers. Generally, through proper maintenance and timely repairs you can easily prevent mold from becoming a problem.”
Mold contamination claims have increased significantly in recent years. In Texas water-related claims have jumped $400 million in the past two years. While Texas has received much attention, increases in mold-related claims are being experienced around the county.
Golden explained that insurers handle mold-related claims on an individual basis and coverage is determined according to the terms of the policy. “The mere existence of mold was never intended to be a covered cause of loss. The critical claims handling question is usually did the mold occur as part of a covered loss. Insurance provides financial protection against sudden, accidental and unexpected loss. However mold most frequently results from a maintenance issue. It rarely becomes a problem in a well-built and well-maintained building,” Golden said.
In addition to facing an increase in property claims, the potential for lawsuits has grown. Real estate agents, brokers, home and commercial builders face possible lawsuits for failing to disclose that a structure has mold. Business owners can be sued for sick building syndrome. Building contractors can be held liable for construction defects while architects and engineers face suits for inappropriate design. Healthcare professionals may be sued for failure to diagnose correctly. Each of these suits would have an implication on insurers. As a result of the wide spread implications from mold claims, insurers have addressed coverage issues in a variety of ways. To clarify the coverage questions some insurers have changed their policy forms. In order to control their exposure to mold damage claims, some companies specifically exclude mold; others allow consumers to purchase mold coverage as an endorsement so that the risk can be priced appropriately.
“Insurers are also responding by strengthening the knowledge base of claims adjusters so they are better able to work with remediators. In addition insurers are actively working to help educate legislators, regulators and the general public so that they can respond to these issues and make decisions based on facts rather than emotion,” said Golden.