Jan 31, 2003

Mold Coverage

An Emerging Insurance Issue

The following are program notes of the insurance panel
presented at the Arizona Water Quality Association October 2002 program,
reprinted with permission from the AZWQA.

As stated at the Arizona Water Quality Association meeting
in October 2002 by

Sean Gillespie, claims manager at Allied Insurance, mold is
becoming the "new asbestos" to insurance companies. More and more,
mold is resulting in damage claims.

There are some things you can do to mitigate mold damage,
starting with response time. If you respond within 24 hours of mold inception,
you have the best chance of limiting damage, since it usually takes 24 to 48
hours for the mold growth to accelerate.

Mold needs three things to grow.

*                The
right temperature.

*                Moisture

*                A
food source such as sheet rock, baseboard or ceiling tiles.

Molds can cause everything from severe allergic reactions to
lung disease, cancer, neurological disorders and sometimes even death.

If you don't see any evidence of mold, there probably
is not any.

If there is evidence, obviously you need to shut off the
water source causing the problem and remove excess water with towels or a
vacuum and dry the affected area. Limit contact with wood furniture or fibrous
material. If you cannot move the wood furniture, place it on a block or
aluminum foil. Pull back the carpet and remove the pad, if possible. If the
damage covers a larger area such as several rooms you should consider calling
in an outside service firm that has the heavy-duty equipment to tackle the

"Should you or an employee improperly install water
equipment or should your equipment fail, you can be liable for a mold claim if
the customer's home is not properly cleared of water," reports John
Larkin, president of the Pure Water Insurance.1 (Visit www.wqa.org for the full

If you do see mold evidence, deal with it as quickly as possible.
There is no set guideline on when you need to call in a professional service
firm when dealing with mold damage. However, New York City does have a
guideline that tends to be followed by the mold and remediation companies and
others. The guideline sets out four levels of mold and it is recommended that
an outside firm be brought in if you reach level three. (See Table 1.)

Remember, mold insurance coverage is available, but it is
expensive. Most coverage does not include mold and some carriers have
permission from certain states to exclude mold from policies. Be sure to check
with your insurance representative for questions on your coverage as well as
any advice for taking care of what could be a costly claim later on.       

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