MOLD
AND THE INSURANCE IMPLICATIONS
Molds are a type of fungi and are neither plant nor animal. There are over 100,000 types of mold with at least
1,000 types found in North America and live in colonies growing on food, fabric, bathroom walls, construction
materials, and soil. Mold proliferates through the release of spores into the air we breathe and are not visible to
the naked eye.
HOW DOES MOLD GROW?
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WHAT IS MOLD?
Food, which includes materials high
in cellulose content such as paper
and wood. Drywall, wallpaper,
carpet, ceiling tiles, dust, and dirt,
are also food sources for mold.
Heat, as mold spores thrive in
temperatures between 32 and 120
degrees Fahrenheit. Temperatures
from about 70-90 degrees are the most
conducive for mold growth. Chances
of mold growth are heightened greatly
between those temperatures.
Finally, water is the key ingredient.
Mold can not grow without
moisture. Where there is moisture,
you will find mold. This is one of
the reasons that leaking pipes,
roofs and ceilings, sewer backups,
floods, and condensation end up
causing mold issues.
INDOOR MOLD CAUSES TWO KEY PROBLEMS...
HOW DO YOU KEEP MOLD OUT OF BUILDINGS?
FOOD HEAT WATER
As part of routine building maintenance, buildings should be inspected for evidence of water damage
and visible mold. The conditions causing mold (such as water leaks, condensation, inltration, or
ooding) should be corrected to prevent mold from growing.
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Most buildings have mold because they offer the three ingredients mold needs to grow:
1. They destroy the material that they feed on, including walls, carpets, insulation, and ceilings.
2. Exposure to high concentration of certain types of mold creates health problems. For this reason, materials that
are infected with mold need to be removed. In fact, mold is like a cancer, and unless it is dealt with and removed,
it will continue to grow. The only way to deal with mold is to eradicate it.
MOLD
AND THE INSURANCE IMPLICATIONS
Killing mold is not the answer. There seems to be a misconception that getting rid of mold by applying bleach or
chemicals is the answer to the problem. This is actually not the case because dead mold spores are just as harmful
to the human lung as live spores.
Mold spores, like Aspergillus and Stachybotrys (black mold), are toxic in both a live form and a dead form. The
key to proper mold removal is to remove all of the mold spores. If mold has been discovered, remember that some
molds can be toxic and that it is best not to disturb the mold which could inadvertently release spores in the air and
create even more problems. A mold specialist should be contacted for a professional assessment.
HEALTH PROBLEMS ASSOCIATED WITH TOXIC MOLD
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DONT SPRAY MOLD!
YOU CAN CONTROL MOLD BY:
• Allergies
• Arthritic-like aches
• Asthma
• Bloody noses
• Chronic headaches
• Coughing
• “Crawly” feeling skin
• Depression
• Dizziness or stufness
• Epileptic-like seizures
• Equilibrium or balance loss
• Fatigue
• Flu-like symptoms
• Irritation of the eyes, nose or throat
• Loss of memory
• Loss of hearing
• Loss of eyesight
• Nausea
• Restlessness
• Runny nose
• Sinus congestion
• Skin rashes
• Sneezing
• Trouble breathing
• Unexplained irritability
• Upper respiratory distress
• Controlling humidity levels
• Promptly xing leaky roofs, windows, and pipes
• Thoroughly cleaning and drying after ooding
• Ventilating shower, laundry, and cooking areas
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MOLD
AND THE INSURANCE IMPLICATIONS
There are two areas, excluding an Environmental policy, that coverage for Mold related claims can be found. One is under the
Commercial Property Coverage and the other is under the General Liability Coverage.
WILL THE COST OF MOLD CLEAN-UP/REMEDIATION BE COVERED?
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HOW DOES INSURANCE PLAY A PART IN REGARDS TO MOLD?
GENERAL LIABILITY
The property owner can be named in a lawsuit or be held negligent because of the possibility of an illness resulting from mold. This is where
Mold in a General Liability policy comes into play. This is why with water damage claims, it is important that the insured almost always put
a claim in timely. Otherwise, if a suit were to be led down the road from an incident and the insurance company were not put on notice
regarding the originial incident, they could conceivably decline to provide a defense for the mold suit. In New York, if coverage applies, it will
be up to the full General Liability limit. In New Jersey, typically the carriers exclude lawsuits related to Mold.
In order to have the damage repaired and the cost of the mold clean-up or remediation covered, generally the mold must have
resulted from a covered cause of loss (peril), such as water damage from a burst pipe. In addition, the insurance company
must have been made aware that there was an incident that this resulted from. For example, if a pipe burst 10 months ago
and a claim was not reported, then the insurance company may deny the claim for mold remediation 10 months later, citing
late reporting. Once that has been established, the policy needs to be reviewed to conrm whether or not Mold is excluded.
COMMERCIAL PROPERTY
Some companies may exclude mold outright and some may not. The ones that provide Property coverage for mold only do so if the
mold if resulted from a covered cause of loss, such as a burst pipe. This can cause problems as excessive humidity or condensation
in some cases may not be considered a covered cause of loss and the remediation not covered, though there may be coverage for a
liability suit depending on various factors.
What caused the mold to occur?
In New York, an Admitted carrier cannot exclude Mold that has resulted from a covered cause of loss. Some carriers provide coverage
up to the property limit and others have a sub-limit. Most other states allow Mold exclusions. In New Jersey, Admitted carriers typically
sub-limit Mold Coverage at $15,000, though some offer the ability to purchase more for an additional premium.
What state is the risk located in?
As indicated above, Admitted carriers typically provide Mold Coverage. Non-admitted carriers, since they are not licensed in that
state, do not have to abide by the same laws requiring such. Typically, any policy written on a non-admitted basis will have a Mold
exclusion. It will be listed in the Forms and Endorsements section as Mold Exclusion or in some cases, Fungi, Wet Rot, Dry Rot
and Bacteria Exclusion. These exclusions remove coverage for remediation of mold, regardless of whether the mold resulted from a
covered cause of loss.
Is the carrier Admitted or Non-Admitted?
OTHER INSURANCE
Most Directors & Ofcers Liability policies will not respond to a suit brought against the board because of a mold issue. Mold would be
considered a pollutant and typically D&O policies have total pollutant exclusions. Commercial Umbrella policies typically follow form on Mold,
meaning if the underlying General Liability policy is providing coverage for Mold, the Umbrella will as well. If the GL excludes Mold, then the
Umbrella will also exclude it.
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