Insurers face increasing risk from toxic mold

California and Texas spawn scariest stories

February 03, 2002|By COX NEWS SERVICE

WEST PALM BEACH, Fla. - Florida's insurance market is feeling the effects of the black mold that infested a Texas mansion and spawned a $32 million judgment against an insurance company there.

Toxic mold - which can grow in damp homes and sicken occupants - poses a rare hazard to homeowners and a growing threat to insurers.

The scariest stories come from Texas and California, with tales of toxic mold making infants vomit blood and healthy adults suddenly unable to remember simple things. Huge legal judgments and rising insurance premiums have followed. But for the most part, mold hype has yet to become reality in Florida, aside from a few cases such as the Martin County Courthouse outbreak in the mid-1990s that sickened workers and forced the building to close.

Florida health officials say there's little reason to fear toxic mold here. "Mold is the same now as it's always been," says Florida Department of Health spokesman Bill Parizek. "What you're seeing now is heightened awareness."

Yet insurers are moving to limit their losses should mold claims rise. Fearing a wave of claims, three dozen commercial and homeowners insurers, including Allstate - which has 11.6 percent of the homeowners market in the state - have asked the Florida Department of Insurance to specify their responsibilities. Insurers want to clarify when they cover mold claims and when they don't, and perhaps limit the amount they'll pay on a single mold claim.

"It's a preemptive strike to avoid a California- or Texas-like situation," says Robert Hartwig, chief economist at the Insurance Information Institute, a trade group in New York. "The typical Florida policyholder will see no difference, because the typical Florida policy holder never would have filed a mold claim in the first place."

Mold is caused by leaks, floods, condensation and other water damage.

In general, Florida insurers say, they'll pay to remove mold if the spores are caused by a covered peril such as a broken pipe or burst washing machine hose. If the mold is caused by a maintenance problem such as a leaky roof, insurers won't pay.

Texas has seen more claims in part because, unlike Florida, it makes insurers pay for water damage caused by maintenance problems, Hartwig said. Texas regulators are considering new mold standards that would limit the amount of a mold claim to $5,000.

Florida regulators want to avoid a mold exemption that is too broad, said Steve Rodenberry, deputy director of the Florida Department of Insurance.

Insurers say they don't want a repeat of the skyrocketing homeowners insurance rates in Texas, where many carriers have refused to take on new policies since a family in June won a $32 million judgment against Farmers Insurance Group.

That family, forced out of its 22-room mansion after a leaky pipe led to mold, charged that the insurer failed to pay a claim to fix the leak.

Famous consumer advocate Erin Brokovich has toxic mold at her home in California, and Brokovich appeared at a news conference with a California family that was forced to burn down their fungus-infested home.

Such images are scary, but insurers say homeowners can't afford to pay millions for every outbreak.

"Mold wasn't a problem in Texas and California until there were several multimillion-dollar lawsuits," says Sam Miller, vice president of the Florida Insurance Council, a trade group in Tallahassee. "If it becomes a covered peril, the rates are going to go crazy."

Facts about mold

What you should know about toxic mold:

There are thousands of types of mold, most of them harmless.

Toxic mold affects everyone differently. Infants and those with immune disorders are especially susceptible.

Symptoms include allergic reactions, asthma and other respiratory ailments. There also are reports of anxiety, memory loss, depression, nausea and diarrhea, although health officials say there's no proven link to mold.

Types of toxic mold include Stachybotrys chartarum, a greenish-black growth that can spawn on fiberboard, gypsum board, paper, dust, and lint. It was one of the types of mold that took over a Texas mansion and led to a $32 million judgment against an insurance company. Other toxic molds include strains of fusarium, aspergillus and penicillum.

Control mold by controlling moisture. There's no way to eliminate all mold and mold spores indoors.

If you find mold, kill it with a weak bleach solution. Fix the source of the water problem to prevent mold growth.

Keep indoor humidity below 50 percent. Vent bathrooms, dryers and other moisture-generators. Use air conditioners and dehumidifiers. Use exhaust fans when cooking and cleaning.

In constantly damp areas, don't install carpeting.

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