| Misunderstood Personal Lines Issues (Part 1) | ||
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Pollution and the Homeowners Policy The questions Let's look at the policy... Pollution on the Homeowners Policy Property Section Property exclusions: We do not insure, however, for loss caused by any of the following: (1) Wear and tear, marring, deterioration; (2) Inherent vice, latent defect, mechanical breakdown; (3) Smog, rust or other corrosion, mold, wet or dry rot; (4) Smoke from agricultural smudging or industrial operations; (5) Discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against under Coverage C of this policy. Pollution definition: Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. There's no language in the policy for liability exclusions. The answers Is there coverage for pollution? In the property section, it is clear that if a covered peril causes the pollution event that damages covered property, there is coverage. However, if a pollutant causes damage there is no coverage. An example: an insured was pouring bleach into her washing machine when the phone rang. When she ran into the living room to answer the phone she spilled bleach on her carpet. The homeowners carrier denied coverage under the pollution exclusion. Since no Coverage C peril caused the discharge of bleach, the exclusion precludes coverage if the bleach is a pollutant. The definition cites "liquid irritant", which includes bleach. Can anything be a pollutant? As evidenced by the previous example, some things we don't see as pollutants can certainly be considered pollutants. These include household items such as: The courts look at issues such as whether the substance in question must be recognized as a hazardous substance, rather than a substance with hazardous potential. In a liability context, since the policy is silent, an insured might be protected if a product in its useful intended context injured a third party to an unforeseen occurrence. This is not the case in the first party section of the policy. Mold coverage on the Homeowners Policy "Molds produce tiny spores to reproduce. Mold spores waft through the indoor and outdoor air continually. When mold spores land on a damp spot indoors, they may begin growing and digesting whatever they are growing on in order to survive. There are molds that can grow on wood, paper, carpet, and foods. When excessive moisture or water accumulates indoors, mold growth will often occur, particularly if the moisture problem remains undiscovered or unaddressed. There is no practical way to eliminate all mold and mold spores in the indoor environment; the way to control indoor mold growth is to control moisture." Source: www:content.honeywell.com/yourhome/mold.htm Mold is both pervasive and harmful. Problem mold is found in 50% of homes. A 300% increase in the asthma rate over the past 20 years has been linked to molds. Furthermore, a l999 Mayo Clinic study pegged nearly all chronic sinus infections afflicting 37 million Americans to molds. Mold has even resulted in mass illness and litigation. In Michigan, Wisconsin and Minnesota in the mid-l980s, thousands of mid-income families fell ill when their homes developed mold problems. In New York City, 125 families at Henry Phipps Plaza South filed an $8 billion mold lawsuit against their landlord. "What's behind the sudden mold epidemic? Experts point to modern home design, including materials used, such as fake stucco (great mold food when wet); the way insulation can trap moisture behind walls; and the fact that today's homes, like office buildings are more airtight, with air-conditioning and heating systems re-circulating contaminated air." Public attention to molds in indoor environments really started from an incident that occurred in Cleveland, beginning in l994. In this incident, cases of pulmonary disease in infants were associated with the presence of the mold, Stachybotrys, in the homes of the children. "The killer mold stachybotrys struck again with a family of three in Texas and their 3-year old son, resulting in scared asthmatic lungs and other ailments. It all started after a copper pipe leak distributed water within the confines of their 11,500 square foot home." Is a loss such as this covered? Mold and insurance Policy language specifically excludes mold from coverage in the property section. If the proximate cause is NOT mold and mold results from the proximate cause then coverage WOULD exist. An example: In the Case of Ballard vs. Farmers, the insured had a leak in the bathroom which was submitted to their carrier. This leak ultimately caused buckling of the floor boards, which, because they were damp, caused mold to grow underneath. The mold was of a toxic nature and caused severe illness in the Ballard family. The house is now uninhabitable as a result of the toxicity. According to the Insurance Information Institute, mold claims are typically NOT covered because they can be prevented by routine maintenance and there is a specific exclusion in the policy language. We recommend that you take the other mold courses, Mold: An Introduction for Insurance Agents and Mold: Insurance Industry Response in addition to this course to complete your understanding of mold and insurance. |
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| Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and Insurance Skills Center, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course. |
