A Video Explaining How Insurers Avoid Mold Litigation

Read the full article at https://www.linkedin.com/pulse/mold-exclusions-conflicting-court-decisions-barry-zalma-esq-cfe and see the full video at https://rumble.com/vqbcjq-mold-exclusionsconflicting-court-decisions.html and at https://youtu.be/Q1DnDWQE-xk and at https://zalma.com/blog plus more than 4000 posts.

Insurance companies in most states have been permitted to exclude mold coverage from new and existing policies. There are hundreds (perhaps thousands) of pending cases against homeowner insurance carriers seeking coverage for losses incurred as a result of mold contamination. In many of these homeowner policies, damage “caused by” mold contamination is expressly excluded from coverage. In the face of this exclusion, homeowners often take the position that their claimed damages were not “caused by” mold, but rather that the damage was caused by some form of water intrusion which resulted in mold contamination, or some other covered peril, and therefore the loss is covered. Insurers often contend that the exclusion applies to any claimed damages concerning mold, arguing either that the damage itself was caused by mold or some other excluded cause or event.

State courts that have faced this issue cannot agree. Some have held that the “caused by” exclusion applies to all mold damage, while other courts have found an ambiguity in the exclusion. Summary judgment for either party is almost impossible because coverage decisions are determined by the facts presented at trial.

The most recent ISO forms, which are used by many insurers in their homeowner policies, contain the following exclusion regarding mold:

We will not pay for loss or damage caused directly or indirectly by [mold]. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. But if [mold] results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.

Courts across the country have reached different conclusions regarding its meaning and applicability. The video details some of the cases that deal with mold exclusions and the ensuing loss clauses.

ZALMA OPINION

Insurers, by carefully writing their policies, have been able to avoid most mold claims and the resulting litigation after the claim is denied. Some decided to provide coverage for mold claims but set low limits of liability while others drafted clear and unambiguous exclusions. Those insurers have avoided some litigation while most have found the new exclusions or limitations of liability to allow the insurer to successfully defend the suits.

© 2021 – Barry Zalma