Mold as an Emerging Environmental Liability Threat

Environmental insurance is becoming an increasingly important part of any company’s suite of insurance products. Also called pollution insurance or pollution coverage, environmental insurance provides coverage for losses resulting from the release of pollutants, which typically are excluded from GL and property policies. Common pollution losses include damages for bodily injury, property damage, cleanup costs, and business interruption. Most market experts expect the frequency and severity of environmental claims to continue in 2022 and beyond, making environmental insurance more important than ever.

According to Risk & Insurance Magazine, five critical risks are changing environmental insurance policies and are emerging hazards.  Of these, mold is perhaps the most prevalent and pressing.

Mold became well known as a potential source of environmental claims in the early 2000s.  From 2000 -2001, mold claims in the United States increased dramatically, from near zero to more than 12,000 in just one year.  Mold claims are most common in areas of high moisture, especially in coastal cities prone to hurricanes, such as those along the Gulf Coast and eastern seaboard. 

ALTA Risk’s environmental products protect our insureds from mold coverage on an occurrence or claims-made basis. Many of our insureds work in abatement-related industries, including asbestos, lead and mold abatement contractor, fire and water restoration contractors, emergency response contractors, mold consultants and other environmental consultants. 

Additionally, our contractor’s pollution liability (CPL) coverage protects non-environmental contractors against mold claims that may result from the insured performing improper work. We insure alternative energy contractors, construction managers and general contractors, and trade contractors such as drywall, electrical, HVAC, masonry, painting, plumbing, and roofing contractors. This type of coverage would come in handy if, for example, a roofing contractor faultily installed a roof so that it leaked and moisture caused mold to spread in a customer’s home. 

A well-documented case of mold damage due to faulty construction took place in Dripping Springs, TX, in 2003 when a family was forced to vacate their newly built mansion due to toxic black mold. Eventually, the insurer conceded that the damage to the property was so severe that the mansion had to be torn down. The family members suffered serious health effects because of the mold as well. While this case is extreme, it’s not unheard of. Its multi-faceted effects are also what can make pollution claims so devastating, both personally and professionally.

Environmental coverage is part of a well-rounded insurance program for any commercial contractor or consultant, and ALTA’s environmental products help protect insureds in the event of a mold claim. Ready to get started? Email us today.