Why Your General Liability Policy May Not Cover Mold Exposure Claims

1/8/2020 (Permalink)

Mold drywall in Wildwood, MO

Why Your General Liability Policy May Not Cover Mold Exposure Claims

A rapid increase in mold insurance claims has prompted many insurance companies to make changes to their general liability policies. As a result, it may be wise to consult an insurance professional in Wildwood, MO, about how mold exclusions may affect your commercial liability coverage.

Existing Exclusions

Before recent policy modifications, several exclusions were sometimes applied to a mold claim. These exclusions include:

• Pollution
  
• Business risk
  
• Owned, occupied or rented property
  
  

Pollution Exclusion

Courts have often disagreed about whether mold infestations are equivalent to the sort of discharge, dispersal or release of pollutants that pollutant exclusions were written for. There has also been some dispute over whether mold can be considered equivalent to the industrial chemicals and other substances generally considered to be pollutants.

Business Risk Exclusion

Many mold insurance claims involve allegations that mold developed in an enclosed building due to defective workmanship. Business risk exclusions have sometimes been used to exclude mold damage resulting from defective workmanship.

Owned, Occupied or Rented Property Exclusion

Landlords and building owners are sometimes sued by tenants for property damage and mold remediation costs that result from mold exposure in their buildings. Existing exclusions for owned, occupied and rented property are sometimes used to deny these claims, but are not always found to be applicable.

Mold Exclusions

Due to the inconsistent application of existing exclusions, many insurance companies decided to endorse commercial general liability policies to explicitly exclude or severely reduce coverage for claims that arise due to mold exposure. One such exclusion is the Fungi or Bacteria Exclusion Endorsement that was filed by ISO. This exclusion expressly excludes cleanup and mold remediation costs, as well as personal injury arising from mold exposure from coverage in a commercial general liability policy with this endorsement attached.
As a result of these common exclusions, your general liability policy may not cover damages that result from mold exposure. However, you may be able to purchase additional coverage for mold insurance claims.