Mold is a ubiquitous substance, most types of which are harmless. A few species have been implicated in symptoms such as runny noses, eye irritation, nasal and chest congestion, wheezing, aggravation of asthma and allergies, headaches, dizziness and fatigue. In severe exposures, the substance has been linked to bloody discharges, fibrous lung growths, pulmonary hemorrhages, cognitive dysfunction, memory loss and irritability.
Toxic mold may start to grow and spread in as little as 24 hours post-water damage, assuming a favorable combination of temperature and moisture, and a food source, such as sheet rock. Mold usually grows because of excessive moisture due to construction defects, leaking windows and pipes, and poorly designed HVAC systems.
The typical homeowner’s policy excludes coverage for certain conditions that may produce mold, such as wear and tear. Generally speaking, if water leakage or accumulation is the product of a “covered” loss, the resulting damage (including mold) is also covered. If mold results from poor housekeeping or maintenance, or from uncharacteristic humidity, the insurer is usually justified in disclaiming coverage.
The presence of specific exclusions can vitiate coverage, and it is therefore important to examine each policy in the context of the relevant circumstances. It is unlikely that insurance companies will be able to assert either the “sudden and accidental” exclusion or the broader pollution exclusion to mold-related claims, but some insurance companies have begun to add specific “mold exclusions” to their standard CGL policies, while others offer an endorsement for an additional cost.
Mold has become a critical focus of toxic tort and premises liability litigation. The carrier must consider all environmental factors and potential effects of water saturation when performing an exposure analysis and in evaluating the potential extent of damages and the costs of repair. An immediate and thorough response will allow the adjuster to determine if the mold pre-existed the water damage and, therefore, whether a basis to disclaim exists. Prompt commencement of a drying out and clean-up process will help to reduce further damage to property and person. The longer the carrier waits, the harder it will be to posit that the mold was not caused by a covered loss.