Condo Media - April 2020 - 32

WANT TO Keep MOLD OUT ?
Insurance would cover mold damage,
he says, only if it results from a "covered
peril"-a roof leak, a broken pipe or a
failed water heater, for example. But that
peril must be the "proximate cause" of
the mold, he emphasizes. If the water
intrusion results from a storm, mold remediation, if required, would be included
in the cost of the claim. "But if you discover that a constant leak has produced
mold that has been growing for weeks
or months," Pierce says, "that generally
would not be covered."
"We don't typically have this conversation" he says, because boards and owners
usually address a water issue immediately,
which insurance policies typically require.
An owner who leaves standing water
under a leaking faucet for weeks "would
have a mold coverage problem," Pierce
says. But if a pipe breaks while owners
are on vacation, mold remediation would
be covered, he says, because the mold resulted from "a covered incident" of which
owners were unaware at the time.

Directors' and Officers' liability policies protecting board members also contain exclusions that would preclude coverage both for defense costs if the board
is sued for mold-related negligence and
for any damages awarded owners who
prevail in these suits. Association general liability policies typically exclude
coverage for bodily injury resulting from
mold or other pollutants, as well, Pierce
notes. Coverage for bodily injury would
be provided only under a pollution or
environmental liability policy, which
few associations carry.
Mold endorsements to the association's master policy can broaden the
coverage for mold remediation and
mold damage, but Pierce doesn't recommend them, he says, because "they
are expensive and they don't broaden
the coverage very much."
As their mold exclusions indicate,
insurance carriers are skittish about mold
damage. But mold-related claims for
damages that are covered won't neces-

sarily trigger alarm bells for underwriters
when they are reviewing renewal requests
or setting premium rates, Pierce says.
"Insurers will treat mold damage
(resulting from covered incidents) like
any other peril," he notes. "If you have
three electrical fires in the same area in
five years, they're going to ask, 'What's
up with your electrical system?'" If you
have three water damage and mold
claims in three years, they will ask the
same question: Are you properly maintaining the property, or are you doing
the bare minimum required to address
water problems when they develop?
"If you're just going from claim to
claim, flying by the seat of your pants,"
Pierce says, "insurers are going to be
concerned about that ."
■ NENA GROSKIND IS PRESIDENT OF
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