By Keith Turner
In 2001, a Texas jury awarded a family $32 million in a mold insurance case. (Ballard vs. Farmers Insurance.) Mold became gold and the plaintiff’s bar did very well until the insurance industry responded by excluding coverage for mold claims under most homeowner’s policies and the defense bar succeeded in excluding evidence for personal injuries suffered because of mold exposure. (See, e.g., Geffcken v. D’Andrea (2006) 137 Cal.App.4th 1298; Cornell v. 360 West 51st Street Realty, LLC, 22 N.Y.3d 762 (2014).)
From 2001 to 2007, I represented a number of major insurers in mold cases. I started the Turner Law Firm in 2007 in large part to handle mold cases against insurers, landlords, property sellers and contractors. I am proud of my record of results in mold cases.
The law and rules have greatly changed since 2001. Do not rely on old internet information in evaluating your mold case. But a good mold case still has value.
Mold law bullet points:
A mold exclusion may not preclude coverage.
Insurance policies vary across different insurance carriers. Mold damages may be covered if caused by a covered peril. An insured may want to consult with an attorney in tendering an insurance claim, which should be made as soon as possible.
Clean up water damage to avoid mold:
- Never ignore signs of a water related damages problem, such as condensation, ceiling stains, or mold growth. Immediately attempt to find and stop water leaks at their source.
- Water leaks can cause moisture, which can cause mold to develop.
- Mold can cause health problems, which can range from runny noses, coughs, nosebleeds, congestion, and sinusitis to more serious upper respiratory ailments such as asthma or bronchitis. (For more information, see California Dept. of Public Health’s website.)
Retain a qualified expert
There are lots so-called mold experts listed in the Yellow Pages. Make sure your consultant is actually qualified, such as many Certified Industrial Hygienists and Environmental and Occupational Health experts.
Identifying the type of mold is important, but so is determining the cause of the mold, e.g., roof leak; concealed plumbing line failure; neighbor’s tree roots; etc. Sometimes a forensic contractor or architect is needed to work with the mold expert to determine the cause of each mold condition.
Remediate the mold.
but first, notify the insurer?
- On the one hand, insurance policies require policyholders to notify the insurer of a potentially covered loss as soon as possible, but on the other hand, some insurers penalize insured for making mold related claims, even if they are not covered. Thus, it is often advisable to consult with an insurance professional, such as an agent or attorney in deciding whether to make a mold related claim.
(See D. Schwarcz, Reevaluating Standardized Insurance Policies, 78 University of Chicago Law Review 1263 (2011); http://personalinsure.about.com/od/preventio1/a/aa052007a.htm)
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Thank you for continuing to bring this issue to light. It is one of the claims issues that the carriers have been tightening down on a has cause customers a lot of confusion.
Thanks for the case summary. Well done. Signs of water damage must be quickly addressed by the homeowner. I have seen too many cases where the homeowner ignored the signs and, before too long, the water loss turned into a mold loss. That only emboldens an insurer to claim none of the loss is covered, or to minimize the amount of loss which may be covered.
My two cents based largely on my personal experience in dealing with a major loss to my home (and my insurance coverage background): Were I to notice signs of water loss, I would: (1) notify the insurer right away of a water loss; (2) immediately contact a plumber to investigate the matter and to find the water source and, at the same time, advise the insurer of the plumber’s contact information, that a plumber is immediately needed to investigate the loss and fix the source of the water loss to avoid further losses (including mold), that the plumber’s investigation costs should be paid by the insurer as part of its duty to investigate the loss, that such costs are not being voluntarily incurred and that your selected plumber will investigate the loss within the next 24 hours unless the insurer, at its expense, sends a plumber to your home (insurers will never act that quickly but again, remember, time is of the essence to avoid mold losses); (3) once your plumber identifies the source of the loss, work with the plumber in quickly preparing a report to the adjustor (of the cause – hopefully, a sudden and accidental loss – always emphasize that) along with cost estimates for immediate repairs to the plumbing system; (4) contact a contractor to provide an estimate for repairing water damage as soon as possible and, at the same time, provide the contractor’s contact information to the adjustor and advise that the adjustor has 24 hours to either approve the contractor or recommend another contractor (remind the adjustor repeatedly – time is of the essence in remediating water damage to avoid mold losses); and (5) look for mold growth, photograph the same, contact a mold remediaton company to investigate and prepare a remediation estimate if necessary and, at the same time, provide that company’s contact information to the adjustor. Depending upon the policy language, there may be efficient, proximate cause arguments with respect to mold (was water the efficient, proximate cause of the loss), issues as to whether certain damages are mold related (not covered) or water related (covered), and some HO policies (I have seen it with AAA) carry limited mold coverage (not much – I have seen $10k in limits – and make sure the insurer does not include the cost of water repairs within the mold sub-limits). Keep this in mind as well: if the insurer is responsible for any delay in finding out the source of the leak or repairing the water losses, and thus the mold is worse than it would otherwise be had the insurer acted quickly to adjust the covered portion of the loss (water damage), the insured can always argue the insurer is tortiously liable for that additional damage irrespective of any mold exclusion.