Toxic Mold is a growing concern for all sectors. With few policies directly related to the management of this pollutant, and the increasing number of claims, it’s unclear who should step in to rectify the situation. Several states have already allowed insurance companies to include mold exclusion clauses in new policies, leaving the policyholder burdened with any costs incurred from mold damage.

What is Toxic Mold?
Toxic Mold
A mold that generates poisons in its spores called mycotoxins. When these toxins become airborne they can cause adverse reactions to people’s health.

Stachybotrys
A greenish-black mold that has been linked to health problems in people. It is the most well known “toxic” mold. Stachybotrys thrives on cellulose products (i.e. wood, paper and drywall) that have been exposed to water or high levels of continuous moisture.

Common Health Affects from Toxic Mold
Symptoms resulting from long exposure to toxic molds include runny nose, cough, aggravated asthma, eye irritation and congestion. If someone with a weakened immune system has extensive exposure more serious conditions may result.

 
Typical Claims resulting from the presence of Toxic Mold

Tenant v. Landlord
Apartment infested with mold that result in adverse health affects.

Employee v. Company
Extended exposure during work hours that result in excessive absences.

Construction Managers v. Suppliers
Materials that result in the construction of mold ridden structures.

Homeowners v. Construction Company
Building a mold infested home, or creating a home that is too air tight, which results in fungal growth.

Homeowner v. Plumber
Leaving a faulty pipe to leak between walls allowing mold to thrive. (As was the case in the Ed McMahon claim settled at $7m).

Damages

• Health Related Claims
• Loss of Property
• Cost of Mold Remediation

Is There Any Regulation of Mold?
Presently, there is no federal regulation of mold because it’s hard to determine what department should handle this problem. The United States Toxic Mold Safety and Protection Act is still a proposal at this time, which would leave legislation in the hands of individual states. Because mold is a living organism it is unclear if it should be classified as a pollutant covered by the EPA or if it should remain a health issue covered by OSHA or local DOH, or DHS. California has passed the Toxic Mold Protection Act effective January 2002. This will create standards for permissible exposure levels and devise a plan for mold remediation. NYS currently has it’s own Toxic Mold Protection Act in the proposal stage.

What Can Be Done to Obtain Insurance?
The Environmental Insurance Marketplace has stepped in where the other markets have abandoned ship and are providing terms for mold. However, because there are no environmental regulations pertaining to mold, the only way to secure a policy is to take some risk management steps. These steps may include:

• Get a mold history of the building which includes past mold or water damage.
• Due diligence- Inspect the building for any visible sign of mold growth.
• Create and implement a mold operation and maintenance plan.
• If there is a history of high moisture content in the building devise a plan to decrease humidity or fix any leaks which add to the problem. Relative humidity should be kept at levels lower than 60% to slow mold growth.
• Create your own remediation plan which can be given to the insurer.

Environmental Insurance for Mold
The main carriers who cover mold are Zurich, AIG, XL Environmental, Gulf, and Ace. Between carriers certain discrepancies will apply to the policy but fundamentally there are a few basic components for mold coverage.

Policy types: Environmental Impairment Liability
Limits: $1 million typical; depending on the case
SIR: Varies between carriers and potential insurers
Term: 1 year typical, can be multiple years depending on the case
Retroactive Date: May or may not be offered.

Required information for the carrier:

• Completed and signed policy and mold application
• Mold O&M plan
• Completed Indoor Air Quality questionnaire/survey (different for each carrier)
• 5 year GL Loss Runs
• Additional requirements may apply dependant upon the carrier.

Toxic Mold Settlements 

• New Haverford Partnership v. Elizabeth Stroot
  $1 m verdict in Delaware awarded to tenants for personal injury.
• Ballard v. Fire Insurance Exchange
  $32 m reduced to $4m in the appeal awarded to policyholder whose insurance wouldn't cover her mold claim.
• Ed McMahon
  Awarded $7m after he filed suit against his insurer and contractor for negligence by his contractor for improperly repairing a pipe resulting in toxic growth and the death of his dog.
• $6,327,293 awarded to 20 townhouse owners in Delaware for personal injury, buy back of property and all attorney fees.
• Additional requirements may apply dependant upon the carrier.

Trends in Mold Claims
There have been 9000 new cases pertaining to mold over the past 3 years alone.

For further information please contact Frenkel Environmental Risk Services in our NY or CA offices.