Business News Santa Barbara News Press
Mold damage a growing problem
INSIDE BUSINESS: Paula Campbell-Taylor 3/24/03
There is a wave of concern in Santa Barbara and our local communities on the consequences of mold contamination in our homes and business structures. It has been estimated that more than $2 billion has been paid nationally on household water damage claims from insurance companies from 1997 to 2001. Potential rate increases needed to cover the cost of mold claims threaten to make home insurance coverage unaffordable for some and unavailable for others. Rising prices and declining availability of homeowners' coverage could have monumental effects on home sales and, as a result, the economy as a whole. Although there are more than 100,000 species of mold, common household molds include cladosporium, penicillium, aspergillus, alternaria and mucor. To grow, molds need a food source, a proper temperature and moisture. Depending on the combination of these conditions, spores can germinate after only 12 hours, and some grow in 24 to 48 hours. Houses and business structures offer sufficient food supply, such as drywall, insulation, wood and paper. When these materials become damp or wet, settled spores can become growing molds. The musty odor associated with mold and mildew is caused by the waste products given off by actively growing molds. These odors may indicate a level of mold contamination that would require remediation. From the insurance carrier viewpoint, the industry is seeing a dramatic growth in property and liability losses as a result of mold-related claims. Property damage from mold, like rust, rot and mildew, is specifically excluded in the standard homeowner's policy. Mold contamination is covered under the homeowner's policy only if it is the result of a covered peril. For example, the costs of cleaning up mold caused by water damage from a broken pipe are covered under the policy because water damage from a broken pipe is a covered peril. However, if mold has had the opportunity to grow outside the original location of damage, insurance may not cover this extended area of damage. The liability losses insurance carriers are experiencing because of mold claims are enormous. Exposure to mold generally occurs through inhalation of airborne mold particles. The extent to which an individual may be affected depends upon the state of health, susceptibility to disease, type and amount of mold contacted and the duration and severity of exposure.

Some adverse health effects can be temporary while others can be long term. Exposure to mold can produce allergic reactions of eyes, nose and throat; arthritic such as aches and pains; asthma; excessive and regular nosebleeds; headaches; flu-like symptoms; and respiratory dysfunction such as difficulty breathing and shortness of breath. Because of the rising number of claims for water damage, many carriers are inserting descriptive language in their homeowners' policies of what is or is not specifically covered. Homeowners filing multiple claims within a time frame of a few years can count on rate increases and more than likely a probable chance of nonrenewal when their policy expires. Few carriers are still providing coverage for mold, and if they are, they have changed their homeowners form as a "Mold Buy Back" option for an additional premium. There are ways to protect yourself and your home or building. First of all, focus on preventive maintenance. If you are aware of water-damaged drywall, leaky roof tiles or failing plumbing, fix the problem immediately. Make use of a dehumidifier to absorb excessive moisture in the air if necessary and operate ceiling fans for better circulation. If you are in the market for a new home or building, check with the real estate agent to verify there have not been any previous claims made. The seller must disclose any prior damage to the property, and if there have been claims made in the past three to five years, chances are carriers won't insure or coverage will be at an all-time high.

One other opportunity to protect yourself and your investment is to get a copy of the CLUE report. This Comprehensive Loss Underwriting Exchange (CLUE) report is a national database comprised of claims filed on houses from the insurance carriers. The CLUE database, cared for by ChoicePoint Inc. of Georgia, contains more than 38 million claims records on homes in every state. The reports show insurance claims for water, wind or fire damage from the past five years. Thirty percent to 40 percent of American homes have a loss history, according to Choice-Point spokesman Chuck Jones. You can get a copy of your home's CLUE report by contacting ChoicePoint Inc. Contact them online at www.choicetrust.com or call (886) 527-2600. If you are buying a house, ask the real estate agent if the CLUE report has been pulled. If you are truly concerned about your future investment, the sale can be made contingent on the seller providing the report. Paula Campbell-Taylor is president of Midstate Consulting Inc. in Goleta. Midstate develops marketing and promotional strategies for local businesses. She can be reached at pct4msc@aol.com.