Mould and Mildew: A Creeping Catastrophe

In February 2000, a Texas grand jury found reason to continue a criminal investigation of child endangerment charges against an insurance company for its handling of a water damage claim. This investigation was prompted by a criminal complaint filed by the policyholder and follows the filing of a $100 million lawsuit in 1999 against the same insurance company for its handling of the claim. The policyholders say that the insurance company did not act properly or in a timely manner following the water damage claim. The allegation is that the house is now uninhabitable.

The family claims that, following the water damage, and while they were still living in the house during repairs, they were coughing up blood. The husband, the family claims, is now suffering from a cognitive dysfunction, among other injuries.

The problem? Mould. Stachybotrys chartarum (a.k.a. atra) to be specific. The mould developed following a water damage loss in 1998. The policyholders allege that neither the insurance company nor the company's expert informed the family that the home contained the deadly mould until their health was irreversibly damaged.

Download: Hazardous Materials Association's Mould Remediation Guide - Procedures for identifying and remediating mould contamination in buildings Click Here to View the PDF or 'Right Click' to 'save link as'  it to your computer.

Is the Texas case merely an extreme example? Or is it a harbinger of things to come?

Many lawsuits have been filed and are being filed around the country involving the improper handling of covered water damage losses that have resulted in mould growth so extensive and severe as to present potentially serious - and in too many cases, actual - health hazards, not only to the occupants of the building involved but possibly to anyone who unwittingly enters the structure. Furthermore, mould growth can cause damage to building materials, such as paper and wood products. Mould contamination and growth may also pose a disclosure issue during a real estate transaction.

According to the Insurance Information Network of California and the Western Insurance Information Service, both sponsored by insurance companies, water damage from frozen and broken water pipes ranks second, behind hurricanes, in terms of the number of homes damaged and the amount of claim costs in the U.S. Damage from water is the most prevalent, yet least recognized, catastrophe. In addition to broken and frozen water pipes, we have to include losses from flood, rain, leaks and surface water, as well as water damage from putting out fires.

Some of these losses are covered, some are not. If the water damage is the result of a covered loss, the resultant damage, mould (including fungi, mildew, etc.), is probably also covered and must be considered in preparing the scope of damages and costs of repair.

The consensus of opinion from the EPA, FEMA, the Centers for Disease Control (CDC), mycologists and microbiologists is that mould may start to grow and spread within 24 to 48 hours in structures damaged by water. Mould can grow exponentially, given the right conditions of temperature, moisture and food sources, such as sheetrock.