Environmental Risk Resources Association Mold Insurance Resource

Mold Insurance Market Worksheet

A grid outlining the various mold insurance markets including their limits, restrictions and minimum premiums is available.

Members can view the full worksheet. (pdf format)
Members: Please login the members area by using the sign in on the left navigation bar then click the above link to view the document.

Non-Members can view a partial worksheet. (pdf format)

If you would like to view a full worksheet version, contact ERRA for membership information: Become a member or webmaster@erraonline.org

Mold Insurance Market Summary

The environmental insurance underwriters are developing insurance products and underwriting guidelines to provide coverage for mold damages.

Traditional environmental insurance policies are being specifically endorsed to cover mold by adding mold, fungus or microbial matter to the definition of a pollutant. With the expanded definition including mold, insurance buyers are able to access the broad range of environmental coverages including bodily injury, property damage, remediation expenses, business interruption, and defense costs.

Remediation stop loss coverage is being developed for very large mold remediation projects.

Coverage is available today for contractors, consultants, and property owners/lessees. Expect minimum premiums in the $5,000 range, claims-made forms, one-year policy terms, no coverage for prior acts and no market for contractors of single-family homes. Most of the environmental underwriters are providing coverage for mold. The key to the underwriting acceptability of the risk is proving to the underwriter that the applicant is being proactive in the management of the mold risk. The larger the risk the more coverage options there are.

The adapted environmental policies fill the coverage gap in commercial insurance programs created by the new mold exclusions in the same way traditional environmental insurance fills the coverage gaps created by pollution exclusions.

With mold exclusions being added to virtually all property and general liability insurance policies, firms have significant uninsured loss exposures. Mold damage claims on homeowner's policies in Texas appear to exceed all other causes of loss combined! There are over 50,000 insurance claims for mold damages, settlements in excess of $1,000,000 are becoming common and there has been one claim made for $9 billion.

Practical risk management advice for the insurance practitioner.

Advise your clients about the impending mold exclusions.
Offer a solution to the new uninsured exposure by obtaining environmental insurance covering the mold loss exposure.
Be sure to list the mold exclusions on any certificates of insurance.

Members and sponsors of ERRA specialize in tailoring a simple insurance policy or creating a highly customized risk management program. Contact ERRA for more information.

Investors Underwriting Managers:
For general contractors and trade contractors mold coverage can be included or excluded on a Contractors Pollution Policy.

For environmental contractors and consultants, mold can be included in a Contractors Pollution Policy.

For property owners, IUM provides coverage for third party bodily injury and property damage for commercial and habitation properties. Onsite cleanup of mold is either excluded or provided on a limited basis.

For more information contact Scott McDougall smcdougall@markelcorp.com 732-450-8727, Jeff Foering 732-450-8771 or Mark Brown 732-450-8766.

Zurich North America
Zurich will include or exclude mold in their contractor and site specific policies. Please contact a Zurich underwriter for more information.

XL Environmental
On all of XL Environmental pollution site products and pollution/professional service products, the underwriting approach on mold is:

All accounts on the above lines are individually underwritten for exposure to mold. A mold buy-back endorsement may be offered after the client completes a supplemental mold application and subject to satisfactory underwriting and risk control review of the application. Applications are available for single site or portfolio accounts as well as on the services side.

Limits/sublimits/SIRs/policy terms are dependent on an analysis of the account and exposures. XL also has the ability to assist clients with enhancing or developing mold management plans through risk control.

The XL Environmental mold supplemental application for single site and portfolios and the mold buy-back endorsement can be found below.

ERRA Members can access to XL Environmental's Mold Endorsement on the ERRA website.

Gulf Insurance Group
Gulf will provide mold coverage in their contractors pollution policy for environmental contractors or consultants which have the necessary operational procedures and background to handle mold issues. Gulf has $20M limit available in their contractors pollution policy.

The mold exclusion is attached on any coverage for contractors performing residental, habitational or commercial construction including fire and flood restoration contractors. This exclusion can be removed for the hightly qualified contractor with extensive mold risk management guidelines in place. Removing the exclusion requires an analysis of the account including: 1. No more than 35% receipts arsing from residental operations. 2. Insured must have written operational and contractual procedures in place specifically for mold. 3. An SIR of at least $50,000.

American Safety Group
American Safety Group offers a standard mold buyback endorsement when the revenue for mold contracting/consulting services are 25% or less of the total. When mold services are in excess of 25% we will underwrite the exposure on a case-by-case basis.

For non-environmental contractors American Safety will either provide the mold buyback endorsement, or in certain cases eliminate the mold exclusion entirely on a CPL form. Classes not eligible include residental building contractors, HVAC contractors and plumbing contractors.

Members can access a copy of the AIG Mold Endorsement on the members section of the ERRA website.

E&O for Certified Contractors with the American Indoor Air Quality Council (CIAQP, CIAQT, CIAQM, CMI, CMC and/or CMRS)

About Mold

Mold in Homes This information from the Minnesota Department of Health is for people who have mold problems in their homes. It presents the health concerns associated with mold exposure and advice on finding and removing mold contamination.

Mold and Mildew: A Creeping Catastrophe From the August 2000 issue of Claims magazine, this article discusses mold, the health effects, remediation and claims reporting.

Toxic Mold: A Growing Risk? In response to this growing concern for the insurance industry, Guy Carpenter's Bradley Smith arranged a one-day seminar to discuss the topic of mold and its potential impact on the insurance industry. This paper is an edited transcript of the presentations made at the seminar.

Toxic Mold Remediation Risk Management Magazine, March 2002. Until recently, mold remediation was regarded as a simple clean-up task. But as the full extent of health, liability and property risk unfolds, many are looking to mold remediation professionals to avoid turning a small problem into a large one. Remediation cleans or removes contaminated materials and prevents mold from spreading to other areas while protecting the health of abatement workers.

EPA Information

EPA Mold Resources Found on the EPA Indoor Air Quality website, various links to resources are found including flood cleanup, home and school indoor air quality, and large building issues.

Mold Insurance Issues

First-Party Insurance Coverage For Mold, by: Edward Eshoo, Jr., Childress & Zdeb, Ltd. , ERRA Winter 2004 Newletter. Over the past four years, there has been an explosion of first-party property insurance claims regarding coverage for mold damage. How have insurers been responding to these claims? Although some insurers have challenged whether mold damage is covered, most insurers have been covering mold damage ensuing from a covered peril. However, the surge in mold-related claims within the past four years, as well as the verdicts in Ballard v. Fire Insurance Exchange and Anderson v. Allstate Insurance Co., have caused insurers to eliminate coverage or to limit coverage for any type of fungus, including mold.

Seven Tips on Mold Management Programs IRMI Expert Commentary, November 2003. With all the hype and craziness about “toxic” mold over the past few years, organizations have rushed (in many cases were forced) to address the problem by developing “mold management programs.” Whether these programs were created to truly educate and manage the risk for the organization or, more frequently, to purchase insurance, many of them lack the essentials of a quality program.

Mold Spreads: Toxic-mold claims are spreading to the workplace, and insurance coverage is pricey -- if you can get it. Roy Harris, CFO Magazine, September 01, 2003. Once upon a time, mold was a problem at work only if you avoided cleaning the office refrigerator for too long. Lately, though, it's becoming the hottest topic in property/casualty insurance, as lawsuits claiming health-related damages from toxic mold spread from residences to offices and other commercial buildings. And with insurance coverage already difficult to obtain, and expensive when available, companies may face some unpleasant choices about how to protect themselves.

Managing Mold Risks (pdf format) The explosive growth in mold damages claims in 2001-2002 has the entire property and liability insurance industry running for cover. All but a handful of specialty environmental insurance underwriters have issued new mold exclusions to either eliminate or severely limit the amount the insurance company will pay for mold related damages

Managing Mold Related Risks, After the Mold Exclusions Become Effective (pdf format) As tens of thousands of property owners seek funds to pay for expensive mold remediations, universal “mold” exclusions are destined to transform many insurance claims on homeowners and all risk property insurance policies into toxic tort liability claims against contractors, engineers, architects, building products suppliers, real estate professionals and landlords. By fact, history and circumstance, risk advisors have already been positioned to be “the insures" of last resort” for their clients unintentionally uninsured environmental and toxic mold claims

Toxic Mold: Practical Considerations to Reduce Potential Liability, George Marek, Quarles and Brady, LLP Quarles & Brady has assisted a number of clients who have discovered mold contamination in commercial or multi-tenant residential buildings. This article will highlight a number of practical considerations in investigating and remediating mold contamination.

Insurance for Mold: Where do we go from here? American Agent and Broker, February 2003. With many accounts likely to receive mold exclusions in 2003, agents must make plans for helping their clients deal with the exposure.

California Senate Approves Bill To Mandate Mold Coverage - American Insurance Services, May 2002. A bill approved by the California State Senate to prevent insurers from managing their mold exposure could cause an availability crisis in the homeowners insurance market if signed into law, says the American Insurance Association (AIA). SB 1763, authored by Senator Deborah Ortiz (D-Sacramento), would mandate new disclosures and prevent insurers from requesting exclusions from the California Department of Insurance for mold as an ensuing loss.

Mold: Where is the Exposure? American Association of Insurance Services, 2002. This publication offers a less technical overview of policy provisions that may either create or exclude coverage for mold-related exposures. It is designed to help claims personnel ask the right questions about a mold-related claim, and to help underwriting managers ask the right questions about their extent of exposure to mold-related claims. AAIS recently released mold endorsements for its Dwelling Properties, Farm Properties, Farmowners, Personal and Premises Liability, Personal Umbrella, and Farm Umbrella programs.

Tracking Mold Claims Horror Story: New Record High in November Independent Insurance Agents of TX, February 2002. The enormity of the homeowners insurance mold coverage crisis is still increasing, according to the most recent Texas Department of Insurance monthly report on water-related losses paid under homeowners policies that shows paid losses hitting another new high of $118.5 million in the report for November 2001.

Insurance Coverage for Mold Arising Out of Defective Workmanship International Risk Management Institute's (IRMI) article discusses the pollution exclusion in the general liability policy, definition of bodily injury and property damage as it relates to the issue of mold.

Molds and Insurance The Southwestern Insurance Information Service offers points on preventing mold, residental insurance coverage for mold damage, and litigation concerning mold.

Mold Exclusion and Endorsements

The Impact of Universal Mold Exclusions on Lenders and Practical Risk Management Solutions
by David J Dybdahl, CPCU, ARM, Senior Consultant, American Risk Management Resources Network, LLC., ERRA Winter 2004 Newletter. The introduction of mold/fungus/microbial exclusions in virtually all personal lines and commercial lines insurance policies over the past two years has created newly uninsured loss exposures for lenders on an unprecedented scale.

TOXIC MOLD: Managing the Risk in the Post Insurance Exclusion Era (pdf format) CPCU Presentation, October 13, 2003 In this presentation David Dybdahl CPCU, ARM, Senior Consultant with American Risk Management Resources Network details the impact of various mold related damages exclusions in traditional insurance policies and then details what kinds of insurance policies should be purchased to insure mold loss exposures on a prospective basis. The presentation contains new research comparing and contrasting the relative magnitude of mold claims to asbestos, superfundand fire damage claims in the United States. Surprisingly mold claims mirrored insured fire damage in 2002! Mr. Dybdahl predicts which business sectors will be most affected by mold damages and presents some of the state based hazard rankings generated by the new Madison Mold Relative Hazard Ranking Model. Some of the results in Mr. Dybdahl's research are surprising. If you thought insurance companies were going to be the big losers from mold damage claims they are number seven on the list. Insurance agents are ranked number two on the list! If you thought mold was a Texas homeowners insurance problem, you will surprised by the state relative hazard rankings for mold damage claims.

New Insurance Exclusions for Terrorism and Mold Create Unprecedented Levels of Uninsured Risks for Property Managers, Property Owners and Lenders Journal of Property Managers, June 2003. Faced with rapidly increasing and unpredictable claims costs, the insurance industry has over the past year methodically excluded insurance coverage for mold and domestic terrorism losses on virtually all of the property and general liability insurance policies sold in the US. The impact on the risk management community from either of these new exclusions individually would be significant. Together they leave a broad cross section of insurance buyers including property managers, property owners and lenders with unprecedented levels of newly uninsured risks.

The Risk Advisor’s Survival Guide to Mold Exclusions Environmental Claims Journal, Winter 2003. Risk advisors are positioned to be the insurer of last resort for toxic mold and environmental damages. Fear of toxic mold has created a storm of environmental damage claims with unprecedented frequency and severity. By fact, history and circumstance, risk advisors have been positioned to be the insurer of last resort for the uninsured environmental and toxic mold claims of their clients. In this paper we will discuss the trends that lead to this conclusion and present a simple loss prevention protocol that risk advisors can follow to avoid professional errors, acts and omissions claims in this area.

Why Mold Is Not Excluded by Pollution Exclusions in Liability Insurance Policies: Mold Exclusions Cause Unanticipated Coverage Gaps ERRA Newsletter, Winter 2003. As tens of thousands of property owners seek funds to pay for expensive mold remediations, mold exclusions are destined to transform many insurance claims on homeowners and all risk property insurance policies into liability claims against contractors, engineers, architects, building product suppliers, real estate professionals and landlords. Even insurance agents, brokers and lawyers who advise clients on risk management and insurance issues will be brought into the fray for failing to procure the proper insurance covering mold losses for their clients.

Insurance Firms Carry Limited Mold Coverage Wall Street Journal, February 11, 2003 The need for mold insurance has never been more crucial for landlords. And never has it been so hard to get.

Mold: The $1 Billion Challenge - Skyrocketing Claims Drive the Search for Solutions Rough Notes Magazine, November 2002. The mold "explosion" over the past two years has had a severe impact on the insurance business. In 2001 alone, mold claims cost homeowners insurers more than $1 billion, five times the cost in 2000. The industry has had its hands full this past year working to develop and obtain approval for mold exclusions, as well as limited buy-back coverage options for mold claims. This article focuses on the mold situation and examines the industry response to the problem, with an emphasis on how AAIS has responded.

Policy Modifications and Endorsements Relating to Liability Insurance Coverage for Mold IRMI.com Expert Commentary, March 2002. Due to the uncertainties as to the applicability of the pollution exclusion and "business risk" exclusions to these types of claims, the insurance industry is adding endorsements to liability policies to absolutely exclude, or to severely reduce the coverage available for mold claims to commercial insureds.

The Mold Exclusion Why do we cover mold? Isn't mold an exclusion on property policies? Yes, a mold or fungi exclusion is found on all the standard property policies. However, this exclusion is not one of the current causation exclusions and thus the concept of proximate cause applies. As a result, mold is covered if it is a direct result of a covered peril. The costs of cleaning up mold after a fire are covered under the peril of fire, for example. But, mold following flooding would not be covered because flood is not a covered cause of loss.

Mold Claims

Mold Claims Charts
If you are an insurance agent and want to know how the domino effect of mold claims will affect you...don't miss the analysis in the Mold Claims Chart. For an analysis of the potential parties and potential costs of a mold claim, view the Mold Management Chart.

An Overview on Mold -- The Latest Challenge to the Construction Industry Thelen Reid & Priest LLP Construction Weblinks, December 2002. The filing of mold-related cases is on the rise, and recent large jury verdicts and media attention undoubtedly will encourage the filing of even more lawsuits. Virtually every participant in the building industry -- owners, contractors, designers and material suppliers -- faces some potential exposure to mold claims.

Insurance Claim Tips For Mold Damage United Policyholders website. Traditionally, mold damage has been covered where it results from a covered peril, such as a broken pipe, a storm, or fire suppression efforts, but not where it occurs gradually over time due to wear and tear. However, public awareness and scientific knowledge of the health hazards of mold have increased dramatically.

Legal Issues

Mold Neurotoxicity: Validity, Reliability or Baloney. By: Paul R. Lees-Haley, Health Education Services. Mold neurotoxicity is an increasingly common allegation in personal injury litigation, although conspicuously absent from the clinic. The current mold neurotoxicity controversy is driven more by lawyers than scientific disagreements.

Toxic Mold - It’s Not The New Asbestos Real Estate Reporter, November/December 2002. Toxic mold has been called “the new asbestos.” The popular press causes panic with articles warning of long-term health effects and catastrophic property damage. Building owners, apartment owners, developers and condominium associations have become constant targets of mold claims alleging millions in damages. A sober look at the facts shows that these claims are much more hype than reality. Armed with this knowledge, a responsible owner or condominium association can navigate through mold exposure and mold claims to a successful resolution.

Mold Contamination of Mortgaged Property: A New and Significant Legal Issue for Lenders, Mortgage Lending Alert, March 2002. Mold contamination in residential dwellings and commercial buildings has become an important legal issue. The recent $32 million verdict in Texas, and smaller verdicts and settlements in other cases across the country, have awakened the plaintiff's bar to the possibilty that there may be a "pot of gold" at the end of a moldy rainbow.

Toxic Mold: The Next Asbestos? Client Alert, February 2002, published by of Paul, Hastings, Janofsky & Walker LLP. So-called “toxic mold” litigation is here, and at least some lawyers claim that it has the litigation potential of asbestos. Thousands of personal injury plaintiffs are currently involved in pending toxic mold cases, an untold number of construction defect cases now center on “mold abatement,” and the insurance industry is changing standard homeowners’ policies and environmental insurance policies to exclude coverage for mold infestation.

Standards and Regulations

IICRC S500 - Standard and Reference Guide for Professional Water Damage Restoration. The IICRC S500 provides a specific set of practical standards for water damage restoration. These standards can be purchased from the IICRC for $35 per copy.

Resources

Moldupdate.com A website maintained by The National Association of Mutual Insurance Companies is an excellent reference for insurance and legal issues relating to mold.


Become A Member	About Us	Contact Us	Newsletter	Supporters