NAII Urges Caution on Federal Legislative Move to Address Mold

July 9, 2002

Congress should proceed cautiously as it considers a federal approach to mold- related insurance claims and seeks to establish mold exposure standards, according to the National Association of Independent Insurers (NAII).

The U.S. Toxic Mold Safety Protection Act (H.R. 5040) would require federal agencies to establish various standards, including exposure and remediation, establish a federal mold insurance program, mandate mold inspections for all sales and leases of residential real estate and provide tax credits for inspections and remediation.

“This sweeping legislation is a step in the wrong direction,” Julie Gackenbach, director of Government Relations for NAII, said. “Typically, insurance policies do not cover mold damage unless it results from a covered claim. However, coverage issues are decided on a case-by-case basis according to the policy contract. A federal insurance program would establish a second-layer of insurance coverage for mold-related losses and result in additional red tape and costs for policyholders.”

The legislation would also require various federal agencies to establish a number of standards related to mold within a very short time period.

“There is virtually no credible science related to exposure to mold, health effects, or remediation standards,” Gackenbach continued. “It would be impossible for the agencies to adopt credible and meaningful standards in the absence of comprehensive scientific research, which could not be undertaken and completed in the limited time frame provided. In addition, numerous federal agencies are already undertaking studies of various aspects of mold and the legislation would preempt their efforts.”

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