Information Center Toxic Mold
Insurance Policies and Mold Disclaimers
The majority of insurance policies contain some form of a mold exclusion clause to protect insurers from paying claims for mold damage in certain cases. With the rise in toxic mold litigation, insurance companies have been trying to extend the reach of these exclusion clauses to further protect the insurers' interests. If you are having difficulty collecting money owed to you under a homeowner's, commercial general liability or other insurance policy, contact an attorney at Herrig & Vogt LLP in Sacramento, California to discuss your legal options.
Homeowner's Policies
Homeowner's insurance policies generally cover the home, garage and any other buildings on the property and the personal contents within these structures. The policies provide coverage for any damage to the insured's property that qualifies as a "direct physical loss." Damage to property caused by mold would seem to qualify as a direct physical loss. However, most homeowner's policies contain an exclusion for damage caused by mold.
Courts have generally interpreted these clauses to apply to conditions in which mold grows naturally over time and not to unexpected events that would normally be covered under the policy, like a pipe burst, for example. In these cases, the majority of courts apply an efficient proximate cause test to determine if the mold was caused by a covered event triggering coverage or by an uncovered event, like a construction defect.
In response to the growing toxic mold litigation, some insurance companies are changing their policies to eliminate coverage for mold caused by even covered events.
Commercial General Liability Policies
Commercial general liability (CGL) policies protect businesses against most liability claims. These businesses include a diverse group, from the owners of commercial property and apartment buildings to contractors and manufacturers.
Regarding toxic mold cases, insurers have argued that the Absolute Pollution Exclusion clause in CGL policies protects insurers from paying out on toxic mold claims. This clause excludes coverage for bodily injury or property damage from "the actual, alleged or threatened discharge, dispersal, release or escape of pollutants at or from the premise owned, rented or occupied."
Since most policies do not specifically list mold as a pollutant, an important question litigated has been whether the exclusion should apply in toxic mold cases. There is a lack of consensus in courts across the country about whether mold should be considered a pollutant. There is a trend to read the absolute pollution exclusion to apply only to traditional pollutants, which does not include mold. Given the lack of uniformity in court decisions, it is important to speak with an attorney in your area experienced in this type of litigation to find out what view your jurisdiction has adopted.
Conclusion
The exclusion clauses in insurance policies may not relieve your insurance company's responsibility to pay on your toxic mold claim. If you have been denied coverage under your homeowner, commercial general liability, or other insurance policy for a mold claim, contact Herrig & Vogt LLP in Sacramento, California to schedule a case evaluation with an attorney experienced in this type of litigation.
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