Mold Defense

Toxic molds have a long history of causing serious health conditions in humans. Many types of dangerous molds can thrive in damp environments in homes or other buildings, usually without any obvious indication of the problem. Over the last decade, there have been increasing reports of serious illness and even deaths attributed to toxic molds. This new liability is an important issue for construction companies, landlords, real estate brokers and agents, and insurance companies.

Molds are a type of fungus using spores to reproduce. Spores can be spread through air, water, or insect contact. Most molds pose no threat to health, but a couple of varieties (Stachybotrys and Memnoniella) contain toxic substances in their spores, which can endanger susceptible individuals. People who are sensitive to molds may develop minor symptoms such as nasal congestion or eye irritation. Allergic individuals can exhibit fevers and breathing difficulties, while vulnerable populations such as babies, the elderly, or the chronically ill might develop lung infections. Serious health effects have been reported, including pulmonary hemorrhages, as well as less alarming conditions, such as headaches, rashes, and stomach upset.

These molds require damp conditions to grow. Damp cellulose-based materials are prime culprits. Damp wallpaper, ceiling tiles, wood and cardboard can foster mold growth. Basements and bathrooms are particularly vulnerable rooms in the average home. Large-scale mold growth may be seen or smelled, but smaller infestations can also be problematic and undetectable without professional cleaning.

Defending against mold claims is a major issue for many businesses and individuals. Damages awards are growing in this area. For example, the Delaware Supreme Court upheld a $1.04 million award to tenants whose landlord did not deal with mold problems in their apartments. The tenants suffered asthma attacks, among other symptoms. Moreover, a California federal jury recently awarded $18 million, almost entirely in punitive damages, to a homeowner against an insurance company that declined coverage of mold damage.

In response to the growth in these types of awards, many insurance companies are developing policy limitations and exclusions for mold damage. Insurers should carefully review current policies and the utility of updating policies to avoid or limit such claims. Other concerned parties, such as homebuilders, landlords, and real estate professionals, should take care to review and understand policy language on mold damage, and should proactively seek to discover the extent of mold problems and take appropriate action to avoid legal difficulties.

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Checklist: Mold Defense

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