Sound Science, Not Lawsuits, Will Solve Mold Dilemma

Almost daily, media outlets around the country run stories on people getting sick or abandoning their homes because of mold. Schools, fire stations, court houses, private homes – any kind of building is seemingly at risk. You might even begin to feel like you are surrounded by it. But, the fact of the matter is we have always been surrounded by mold.

Mold is an ever-present fact of life. It is a critical element in many drugs and food products. Mold has always existed, both indoors and outdoors. There are literally hundreds of different strains of mold that have been growing in buildings for a long time. It can enter a building through open doorways, windows, heating, ventilation and air conditioning systems. Mold spores found in the air are brought indoors by attaching themselves to people’s clothing or an animal’s fur. When mold spores drop on places where there is excessive moisture, the perfect breeding ground for mold growth is created.

Perfect breeding ground for lawsuits
As the growth of mold has increased indoors, so has the paranoia and propaganda about the effects of mold exposure. Widespread misinformation about the health effects of mold and a selective interpretation of the facts regarding insurance coverage for mold have led to the perfect breeding ground for media stories and lawsuits. The problem is not that mold growth is new—the problem is the fundamental perception of mold and its health effects has changed.

Trial lawyers have coined the phrase “mold is gold,” and are fanning the flames by advertising in newspapers, new home developments and on the Internet. One insurance company’s defense attorney estimates there are 2,000 plaintiffs in mold cases in California alone.

Media accounts and fear tactics by trial lawyers are causing consumers to panic when they find mold in their homes. Consumers are filing record numbers of insurance claims for mold damage. Policyholders exhibit paranoid reactions to mold by insisting that insurers remediate any presence of mold to an unrealistic standard.

Insurers are paying hundreds of millions of dollars in water-related claims in California alone. Insurers are relocating policyholders while cleanup is done, despite no evidence to show that this is necessary. These additional claims costs and an increase in bad-faith lawsuits are driving up insurance rates and have forced insurers to downshift into defensive underwriting or to stop writing new homeowners and commercial coverage altogether.

Unpredictability leads to uninsurability
Insurers use loss data from previous claims to project losses and to price premiums. The loss data from mold claims are no longer relevant because the frequency and severity of mold claims have skyrocketed in the past two years.

The absence of standardized remediation practices is exposing insurance companies to increased litigation costs. Insurers have no way of knowing if their steps to remediate a claim are correct or effective. This guessing game makes insurers vulnerable to claims for extra-contractual, bad faith or negligent claims handling practices.

Mold is rapidly becoming uninsurable because insurers cannot predict future losses, and therefore cannot price premiums adequately. Moreover, the recent trend of off-the-wall jury verdicts for allegedly negligent claims handling practices add to the uninsurability problem.

Sound science is lacking
The void of sound science and the increasing paranoia over mold have created a climate of overreaction. The lack of accepted scientific standards for mold exposure allows juries to decide lawsuits based on emotional arguments, not scientific evidence.

There is currently little definitive, credible science on health hazards related to mold. The actual toxicity of certain mold in indoor environments is uncertain, and there is much debate surrounding this issue.

Property owners and insurers are spending millions to cleanup mold using unproven and often unnecessary techniques like “air scrubbing.” Until accepted industry practices for remediation and mold exposure are developed, trial lawyers will be able to use uncertainty to make science in the courtroom, garner large jury awards and as a result, insurers will be forced to find ways to limit their exposure.

State and federal studies
Despite the prevalence of conflicting science, some entities are trying objectively to study the effects of mold.

A law authored by Senator Deborah Ortiz (D-Sacramento) in 2001 was the first step towards examining whether mold presents any health effects beyond allergies in the general population. This law requires the California Department of Heath Services (DHS) to assemble a task force of industry experts including public health officials, environmental experts, consumers and affected industry representatives such as insurers, builders and realtors.

The DHS task force was supposed to consider the feasibility of adopting exposure limits to mold in indoor environments. This study was to examine existing science and consider standards for exposure based on the average population. The study is also designed to establish guidelines for the appropriate testing, assessment and remediation of mold.

California’s $24 billion budget shortfall has put this effort on hold. DHS has not assembled the task force or conducted the study.

On the federal level, the Institute of Medicine, a branch of the National Academies, has created a special committee to study the health concerns of mold, mold, known as the Committee on Damp Indoor Spaces and Health.

Future implications
The general public needs a process to follow when mold is found in homes. Accepted practices for the testing and removal of mold will alleviate consumers’ fears. Insurers also need an accepted process to follow in order to meet the needs of policyholders and avoid bad-faith claims.

Any scientific examinations of this complicated issue must have three critical premises.

No preconceived notions—Studies should make no presumptions about whether mold has health effects beyond those of a typical allergen.

General population impact—Studies should reflect and examine the effects of mold on the general population. Establishing a zero tolerance policy is impractical considering that mold is ubiquitous, including in the air.

Standards for testing, assessment and remediation must be technologically and economically feasible.

Until reasoned, scientific standards for assessment, testing and remediation of mold are developed, trial lawyers will continue to fuel consumer fears and insurers will struggle to manage this uninsurable risk.

Nicole Mahrt is public affairs director, western region, for the American Insurance Association.

Topics Lawsuits California Carriers Claims