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Insurance recovery may be hard for mold damage
Don't assume that your insurer will cover mold-related liability, cautions David Dekker, JD, an attorney specializing in construction for Howrey LLP in Washington, DC.
Insurers began including mold exclusion clauses in general liability and property policies in the late 1990s, as a response to a spike in mold claims and case law determining that the standard pollution clauses did not cover mold claims, he says. To make sure you have coverage for mold claims, Dekker says you can negotiate with the insurer to remove the mold exclusion clauses - not very likely unless you have significant bargaining power - or you can buy a pollution policy or environmental insurance to specifically cover such a claim.
"However, you must be careful when buying one of these pollution policies off the shelf. In my experience they usually are not very clear about whether they cover mold or not, and you don't want to just assume they do," he says. "In most cases, if you push the carrier, they will add an endorsement clarifying that it covers mold, but you can't just buy a pollution policy and think you've covered yourself for mold. It all depends on how they define a pollution event."
Dekker also cautions risk managers to check the credentials of mold consultants carefully to ensure that they are qualified to provide advice on such an important issue. At the same time, however, he says risk managers must be wary of consultants who overstate the risk.
"Some consultants tend to spread a mold hysteria, overreacting when a little bit of mold is found," he says. "Make sure you have people who know what they are doing, but don't get crazy about it. If it rains overnight and there's a little bit of mold forming, you've got to deal with it. But you don't need three guys in space suits showing up at your construction project."
For more information on insurance recovery for mold damage, contact:
David Dekker, JD, Howrey LLP, Washington, DC. Telephone: (202) 383-7327. E-mail: firstname.lastname@example.org.