In an intensive seminar, the Independent Insurance Agents & Brokers of America (IIABA) explained the critical recent developments in mold exposures and litigation and broke down the finer points of insurance coverage of mold for independent agents and brokers attending the association’s Convention & InfoXchange in Las Vegas.
“Mold is one of the hottest topics facing the insurance industry today, not to mention the bane of underwriters everywhere,” said Bill Wilson, instructor of IIABA’s “Got Mold?” workshop and director of the Big “I” Virtual University. “On the heels of several recent multi-million dollar judgments, some attorneys are comparing mold to asbestos and lead claims with regard to litigation potential.”
The IIABA seminar examined the mold problem and the coverage—or lack thereof—under standard homeowners insurance policies. Wilson told seminar attendees that mold claims, which have traditionally been filed on homeowners policies, are likely to advance into the commercial sector and affect such lines as commercial property, commercial liability, products liability, builders’ risk/construction defects and even workers’ compensation.
“It is essential nowadays for you to learn as much as possible about mold exposures,” Wilson explained to agents and brokers. “You need to be able to distinguish between what is truth and what is myth, and to fully understand what is and isn’t covered.”
Wilson shared some startling mold statistics with seminar attendees. “For one large insurer, the average water damage claim three years ago was $3,500. Today, it is $35,000,” Wilson said. “In just two years, one large adjusting firm has gone from no mold claims to six or seven a day. It has gone from having no microbiologists to a staff of nine!”
Some parts of the country, including large states like California and Texas, recently have experienced an explosion in the frequency and cost of water claims. Mold is the culprit. In a two-year period, mold claims in Texas increased from about 1,000 to almost 22,000, resulting in payments in excess of $1 billion. The average mold claim size in the mid-1990s was $4,000. Today, it exceeds $22,000.
Mold claims and lawsuits range in size from a few hundred dollars to an $8 billion suit against a NYC apartment building owner. Wilson told seminar attendees that is vitally important for them to be fully equipped with the correct answers to provide clients who bring them to task on any of the abundance of misinformation being circulated by mold or trial lawyers attempting to profit from fear and hype.
“Excuse the pun, but mold is a growing concern that is not going to just go away,” Wilson said. “It is a tricky issue that you cannot avoid, and it has few specific government guidelines and little significant medical information. Therefore, there is a lot of false information out there that your clients are hearing about. Their mold questions are going to become more frequent and complicated. You have got to be prepared to give them informed answers and break down their policies as they relate to mold coverage.”
Wilson dissected various coverage issues involving toxic mold claims under both personal and commercial lines policies. He also equipped seminar attendees with an extensive Home Loss Prevention Checklist. “There are some special risk management techniques you can use with your insureds to mitigate water intrusion and mold problems,” Wilson told agents and brokers.
The checklist is available for download at the Big “I” Virtual University (VU). Visit www.independentagent.com and click on the “Virtual University” tab to access the VU.
The Convention & InfoXchange is IIABA’s showcase meeting taking place in Las Vegas from Sept. 21-24. The event features a compelling company CEO roundtable; several prominent guest speakers and panelists; a variety of innovative continuing-education (CE) classes and other cutting-edge workshops; the largest exhibit hall in the insurance industry; numerous networking opportunities; and many other exciting events.
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