|The lack of flood insurance coverage in Gulf Coast cities received much coverage in the wake of Hurricane Katrina, but mold damage exclusions have steadily crept into policies over the last few years.
Mold exclusions are common for insurance policies in most states, prompted not necessarily by catastrophic hurricanes but from the proliferation of household and commercial mold issues. The exclusions originated, largely, due to hefty claims in Texas, inlcuding a landmark 2001 case where a woman received $32 million (later appealed to $4 million) for mold damage in her home. Previous claims had averaged tens of thousands of dollars.
The industry moved to protect itself from mold, which unlike many other problems that require remediation can be chronic and return when moisture returns, particularly in humid climates. According to the American Risk Management Resources Network, insurers saved themselves $30 billion in liability by excluding mold coverage, as reported by the Milwaukee Journal Sentinel on Oct. 22, 2006.
Coverage varies by state, with some policies excluding mold altogether, or some allowing protection for an additional fee. Homeowners still have options for mold coverage under homeowner's insurance, but commercial insurance policies have stricter rules, where mold damage is more common. As a general rule, policies will not cover damages if the mold is the cause of the loss. But if the mold results from other peril, it may cover some of the damages. Mold that results from improper maintenance is typically denied.
After Hurricane Katrina, homeowners could purchase flood insurance policies through FEMA, which covered both flood and mold damage up to $250,000.
Even in the event of a disaster, Ben Kollmeyer, corporate technical director of Forensic Analyst Consulting Services, says it can be hard to make claims because it is almost impossible to tell which is pre-existing mold problems and which were caused by the flood."It's a grey area and can be really sticky to sort out," Kollmeyer says."If the windows are leaking and causing mold growth inside a wall cavity and then a hurricane hits and everything gets wet-what's from the hurricane? It's hard to prove."
With commercial insurance policies varying so widely by company and state, the best approach is to negotiate for mold coverage, even at an extra fee, and invest in preventative maintenance. n
Click here for Lodging's full coverage of mold damage on the Gulf Coast.
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