A Video Explaining Mold Claims Exclusions in Insurance Policies

Mold Exclusions

There can be no coverage for injuries caused by mold if at least six months elapsed between notice of mold and the date of alleged loss. Therefore, according to the Eighth Circuit Court of Appeal, mold under such facts is not “an undesigned, sudden, and unexpected event” as required by the policy. (Citation omitted.)

“While … first drop of leakage might be sudden, … contamination occurring over a period of time falls outside the definition of ‘accident.’” “[T]he purpose of a commercial general liability policy … is to provide coverage for tort liability for physical damage to others, and not to insulate an insured from economic losses flowing from breach of its contractual duties.”

In Florida, the court found an exclusion for mold damage to be clear and unambiguous even when the precipitating cause was other than mold. It held:

To the extent Plaintiff is claiming coverage for mold damage that resulted from displacement of the home due to sinkhole activity, such coverage is explicitly excluded from the policy. In unambiguous terms, the policy states that “there is no coverage for … [a]ny loss or damage to your … mobile home involving in any way the actual or potential presence of mold … whether occurring independently or if directly or indirectly caused by or resulting from an Insured Peril.”

In Texas, applying “surface water” and mold exclusions, the court found that an average reasonable person would not limit surface water to rain falling only on dirt and not on any paved surfaces or other structures. The ordinary, everyday meaning of words to the general public is what counts in interpreting policy language. The ordinary meaning of the words “surface water” in the policy can reasonably include rainwater that has collected on patio surfaces.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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