|Higher homeowners premiums? Blame it on
Mold, the source of penicillin,
also has an evil side: It's taking over homes, sickening their occupants
and creating havoc in the homeowners insurance industry.
A Texas family bulldozed its 22-room mansion rather
than face it. In Oregon, a family saw how much eradicating mold
would cost and opted instead to have the fire department burn their
house down. It even killed Ed McMahon's dog, the entertainer alleges
in a lawsuit.
Mold has always been around, but modern building techniques
have made it worse. Homes are more airtight than they used to be,
which means any liquid that gets inside stays trapped inside, allowing
mold to grow -- and sicken people who breathe it in.
The health consequences of exposure to mold can
vary widely, depending on a person's health and sensitivity. The
most common symptoms are similar to hay fever or other allergies,
according to the Centers
for Disease Control.
If you're prone to allergies or have a weakened immune
system or respiratory problems, you're more likely to feel the effects
There are thousands of different kinds of mold, and
the stuff is everywhere, the CDC says. Any place you
combine heat and water, you're going to have mold.
Indoors, it's most often found in spots where water
accumulates, such as bathrooms and basements. So the basic prevention
is that if you see it or smell it, clean it up with a diluted bleach
The biggest problems occur when there's water damage,
such as a toilet cracking or a pipe that leaks inside a wall, which
soaks the surrounding building materials and doesn't get dried out.
The only way to fix the problem is to rip out the walls or floors
and replace them, which can cost thousands of dollars.
McMahon and his wife filed suit recently, seeking
more than $10 million in damages as the result of toxic mold that
sprouted in their California home after a pipe burst and flooded
During the subsequent clean up, the McMahons started
getting sick and their dog died, the suit says.
The McMahons are hardly the only homeowners crying
foul. As an insurance issue, mold is huge. Jury awards and insurance
claim payouts have included an $18.5 million jury award in California,
a $4 million award in Virginia, and more than $118 million in mold-related
insurance claims -- in a single month -- in Texas.
Already, homeowners in Texas and California are feeling
the impact with higher homeowners insurance premiums and cancellation
notices. Bo Gilbert, director of governmental relations for the
Independent Insurance Agents of Texas, says the state's top homeowner's
insurance providers announced they would stop writing new policies
because of the growth in mold-related claims until they can start
using a different form that will exclude claims for water-related
With insurers backing off on writing new policies,
home buyers who need proof of insurance to get a mortgage have a
problem. The Texas Department of Insurance has reported complaints
from consumers who were held up on getting a loan, and the state's
bankers association is concerned that it could push mortgage interest
rates higher as lenders have trouble getting national resellers
to buy Texas loans.
"The biggest obstacle here is consumers will
have to be educated in the differences in policy forms, and then
there has to be a shift in mindset," Gilbert says. "Everybody
had this Cadillac coverage. People will have to understand that's
no longer readily available. It will still be offered, but they'll
pay for it.
"The other issue we need to understand is the
losses have still not stabilized, and the insurers are still uncertain
how to predict future losses. These losses keep growing every month.
Companies don't know what to do on the pricing. It's unknown territory."
Anyone who's had a water-related damage claim in the
last three years may be hard-pressed to find homeowners insurance
at any price, says Jenny Jones, president of Elkins/Jones, a major
property-insurance broker in Los Angeles.
"We've already heard that insurance companies
will go back and re-underwrite their book of business," Jones
says. "Any house that's had a major water damage claim in the
last three years, they'll non-renew. Not because it has mold, but
Better construction, more mold
Part of the reason for the recent rise in claims has to do with
construction techniques that have become standard in the last two
decades, says Joe Lstiburek, an internationally recognized expert
in moisture-related building problems and indoor air quality.
In the old days, Lstiburek says, mold wasn't a problem
even though houses leaked because they were built in a way that
allowed them to dry out after they got wet.
But with the emphasis on building more tightly sealed
houses for energy efficiency, once water is trapped inside, it takes
much longer to dry. That gives mold a chance to form, particularly
if the builder tried to save money by using lower-cost materials
for roof decking, floors and interior walls.
"What we have now is nothing compared to what's
coming," he says. "I'm talking about mold extraordinaire.
As water control starts to fail, the cost of litigation will go
through the roof."
Two ways to reduce the cost of homeowners insurance
are to take higher deductibles or to get a policy that doesn't cover
water damage, Jones says. You can also analyze your homeowner's
insurance to see if there's any coverage you have that you can do
"You have to be creative," she says. "That's
the biggest thing."
You can also show your insurance company that you're
on the ball about reducing the risk of mold-related damage. Click
here for tips on keeping mold from growing in your home.
-- Updated: May 19, 2003