A growing awareness about the problems from household molds has the insurance industry tightening its coverage and environmental-services companies working to keep up with the growing demand for mold analysis and cleanup.


A 2001 lawsuit, in which a family won a $32 million judgment against its insurer after mold took over a Texas mansion, has drastically altered the insurance industrys treatment of mold and water problems, says Marilyn Cooley, manager of private-client services at the Spokane office of New York-based Marsh Inc.


Although the judgment was knocked down to $4 million last year in an appeal, its effects are lingering, Cooley says. Many insurance companies either have eliminated coverage for mold problems, restricted it, or are refusing to insure homeowners whose houses have a history of mold problems. Some companies are taking it a step further by dropping current policyholders who make more than one water-damage claim, Cooley says.


Homeowners insurance is a nightmare right now, and mold is one of the reasons why, she says. All the insurance companies had sort of a knee-jerk reaction (to the Texas lawsuit).


Marsh is a broker for many insurers, including Warren, N.J.-based Chubb Corp., which recently has excluded mold from its coverage in 15 states, Cooley says. That exclusion doesnt apply in either Washington or Idaho, but its probably coming within the next two years, she says.


Mold-damage claims are climbing in the U.S., says the Insurance Information Institute, of New York City. The average number of annual water-damage claims, which include mold problems, rose to 2.18 claims per 100 households in 2000, the most recent year for which information is available, up from 1.82 claims per 100 households in 1997, the institute says. The average amount paid for each claim climbed to about $3,350 in 2000 from $2,618 in 1997, it says.


Mold problems cost U.S. home insurers more than $1 billion in 2001, the most recent year for which figures are available, says the Insurance Journal, a trade publication. Even though it doesnt have a cost figure for 2002 yet, it predicts that cots to homeowners from mold damage will grow by 9 percent this year.


Molds hazards


Molds reproduce when their tiny spores, which are invisible to the naked eye, float through the air and land in damp places, says the U.S. Environmental Protection Agency (EPA). Theyre naturally occurring microscopic fungi, but when they grow indoors, such as on wood, walls, and carpets, they can cause health problems.


Mold can cause hay fever-type symptoms, such as sneezing, runny nose, red eyes, and skin rash; allergic reactions; asthma attacks; and irritations to the eyes, nose, throat, and lungs, the EPA says. Areas of houses that are most susceptible to mold growth are attics, crawl spaces, the backs of gypsum walls, under sinks, and on furniture placed close to moist exterior walls, the EPA says.


The Texas lawsuit illustrates a nightmarish example of the problems linked to household molds. The family sued its insurance provider, Los Angeles-based Farmers Insurance Group, after mold infested the flooring and walls of its 11,500-square-foot home when copper plumbing leaked underneath the house. The jury found that Farmers engaged in deceptive conduct and fraudulent acts in its handling of the familys water-damage claims, several media reports say.


Family members said they experienced headaches, bloody noses, dizziness, fatigue, and respiratory and sinus problems, according to court documents. Doctors testified that the husband suffered brain damage, including memory loss, and is unable to work as an investment banker, his former profession.


Chad Johnson, a certified indoor-air quality professional with the Spokane office of MCS Environmental Inc., of Missoula, Mont., says hes never encountered a mold problem as advanced as the Texas case, but he has seen some hideous mold concentrations here.


The biggest problems are found in rentals, he says. The renters see it, they tell the landlords, who might do something cosmetic to fix it, like put bleach on it, but that doesnt really help.


Reducing moisture and improving ventilation are the best ways to control mold, says Mike Kingsley, owner of King Environmental Services, of Spokane. Homeowners should dry puddles of water or moist areas in their homes with towels and fans immediately after detecting them, and contact an environmental-services company to detect whether more moisture exists, he says.


Just because something looks dry doesnt mean that it is, Kingsley says.


Using bleach water or other cleaning products can reduce small amounts of mold, such as on bathroom walls, but Kingsley warns that spraying cleaning products can actually lift mold spores and spread the problem.


The EPA recommends that a professional mold-remediation company clean moldy areas larger than 10 square feet. Smaller problems can be cleaned with a rag dampened with bleach water and a wet vacuum on floors and walls or a steam cleaner on carpets and upholstered furniture, the agency says. Goggles and gloves should be worn, it says.


Professionals cleaning larger areas might use high-efficiency particulate air vacuums and heavy-duty protective gear. Entire walls or sections of flooring sometimes must be removed and placed in sealed bags.


Both Kingsley and Johnson have found mold on painted surfaces and inside walls, among other places. It can occur in newly built homes with airtight construction, or in older homes with leaky plumbing or cracked foundations. Often, the problem is avoidable with attentive home care, Johnson says, such as repairing broken plumbing, leaky roofs, and other sources of moisture within 48 hours after the problem is found.


Normally, there are indications that the people should have seen, like mold growing on the (interior) walls, he says. There are a lot of clues out there; you just have to pay attention.


Aside from the obvious presence of black, white, or otherwise colored molds growing within plain sight, other serious clues that mold could exist in a home are warped floors, tiles popped out of place, and the smell of mildew. Regardless of where it manifests, Johnson says mold is a growing concern among homeowners.


Ive seen an increase in mold problems, he says, but I think a lot of that has to do with awareness. Mold has always been with us, and it will be in the future. Its just a matter of knowing how to manage it.


Travis Trent, regional manager for Fulcrum Environmental Consulting Inc., of Spokane, has seen a similar trend.


Half of the calls coming into the office lately are about mold, Trent said during a telephone interview while attending a national conference on mold in Los Angeles. Mold problems make up about 30 percent of my work now. That number has been increasing substantially within the last year, and Id be surprised if its not up to 50 percent in another year.


Many such calls come from homeowners concerned that mold is causing their health problems, he says.


Typically, theyll say something like, We moved in nine months ago, and the kids have been sick ever since, but when they stay at Grandmas for the week, they get better, Trent says.


Mold affects other industries


Mold problems have had little effect on the residential real estate industry here thus far, says Jim Dashiell, president of the Spokane Association of Realtors and sales manager with Tomlinson Black North Inc. In 13 years of working in the Spokane area, Dashiell says he recalls only one case handled by a colleague when a buyer discovered mold in a home during the closing period and chose not to buy the house.


Kingsley says he is aware of several such situations in the last few years.


The biggest effect on the real-estate industry is disclosure, he says. The heightened awareness is so incredible that everybody wants to have their home tested before they move in, which is a good idea.


Jim Fechner, owner of BrickKicker Home Inspection Inc., echoes that recommendation. He says home buyers and homeowners who find mold should hire an industrial hygienist who would have special equipment that detects moisture and mold in hidden areas. Lab analysis can determine whether its harmful.


Most often, the problem takes root during the homes construction, he says. If grading isnt done properly and water drains toward the house instead of away from it, waterand thus mold problemscan occur, he says.


Water wins, Fechner says. If you dont manage it with either a gutter or a drain spout, it has a way of finding its way into the house.


In another tactic applied at the time of construction, duct and fan systems are being put in many new homes to exchange air in the home with fresh air.


Also, builders should be taking care to ensure that building materials, particularly materials like wood that can absorb water, are kept dry until theyre nailed in place, and no longer are exposed to the elements, Johnson says.


Kingsley says liability insurance to protect construction and environmental-services companies from mold-related claims has risen, including his own insurance rate, which has doubled in the last two years.


Fechner adds that mortgage companies increasingly require homeowners to get written statements that say homes are mold free before financing is finalized.