The Horror In Your Home?

[Guest guest]

http://www.forbes.com/2002/09/20/0920home.html

September 20, 2002

Home Improvement

The Horror In Your Home?

Betsy Schiffman

The headlines seemed more absurd than they did alarming.

Ed McMahon, ny Carson's former sidekick, filed a suit against his

insurance company and local contractor for $20 million because of a " toxic

mold " found in his Beverly Hills home that he claims lead to the death of

his dog Muffin and caused ongoing health problems for him and his wife. The

McMahon's lawyer, Allan Browne, says the couple is still undergoing

treatment for their undisclosed ailments now, more than six months later,

despite the fact that allergists say most mold-related problems usually

disappear within days or weeks of eliminating exposure to the allergen.

" Toxic mold " --such as stachybotrys atra--isn't conclusively linked to

anything more serious than sinus problems, asthma and allergies. While

allergies are a nuisance, they're treatable, making it hard to believe that

a construction mishap could really cause $20 million worth of damages. The

real danger of mold is what it will do to insurance premiums and real estate

development in the U.S.

The downside of mold-related claims and lawsuits by the thousands of

Americans is that homeowners in states such as California, Florida and

Texas--where mold claims have risen dramatically--are spending more on home

insurance premiums, and they're no longer getting the mold coverage they

were offered before.

That hasn't stopped mold business from, well, mushrooming. After a Texas

plaintiff won a $32 million judgment against Farmers Insurance in Texas for

an allegedly mishandled mold claim in June 2001 (Farmers Insurance is

appealing the ruling), mold claims rose 1,300% between the first quarter of

2000 and the fourth quarter of 2001 in Texas, according to the Insurance

Information Institute, a trade group in New York. In return, Texan

homeowners are spending between 20% and 50% more on home insurance premiums.

Part of the problem in Texas was that home insurance policies there have

always been more liberal towards water damage claims, and they often failed

to specify that mold coverage would be provided in the case of sudden and

accidental water damage (such as in the event of a flood, which would likely

leave residual moisture where mold can grow). After the financial incentive

was introduced and claims rose dramatically.

Today thousands of law firms that claim to specialize in " mold litigation. "

, partner at , Castle & Nicholson in Los Angeles, says her

firm probably sees 1,000 pre-claim mold cases a year where residential and

commercial property owners threaten to sue the construction firms or

developers for mold-related " defects. " Very few of the cases make it to

court, and even fewer cases result in a favorable ruling for the plaintiff,

according to . In one extreme case, a homeowner refused to have his

builder repair the water leaks in his home in hopes that he could take the

case to court and make a nice profit.

Some insurers have dropped mold coverage altogether, others have placed caps

on mold claims (ranging between $5,000 and $10,000). In 2001, insurers spent

$1 billion on mold claims, five times as much as was spent on mold claims in

2000. The argument against insurers--waged by the likes of environmental

activist Brokovich and Ed McMahon--is that mold problems are causing a

slew of health problems, and if a home insurance policy promises mold

coverage, the insurance company is obliged to pay up. Critics charge that

insurers are selling homeowners umbrellas in the summer and taking them away

in the winter.

Naturally, insurers beg to differ. They argue that mold is the homeowner's

responsibility. " The simple presence of mold, the fact that it's around,

like termites or damage from vermin, is considered a home maintenance issue,

not an insurance-covered issue, " Gordon , president of the Insurance

Information Institute, an insurance trade group based in New York, testified

in front of the House of Representatives in July.

While it is hard to be sympathetic with the insurance industry, it may have

a point. There is no scientific proof that a new strain of molds-- " toxic

molds " --with superpower attributes (mostly given by those profiting off the

molds, such as toxic mold attorneys and " mold experts, " or industrial

hygienists) exists. Despite the anecdotes of mothers who say their eyes burn

or claim their children have been brain damaged, scientists haven't been

able to link physical ailments with mold itself, especially given the fact

that on any given day Americans could be exposed to any number of

potentially toxic substances.

Dr. Redd, an air pollution scientist at the Center For Disease

Control, issued a statement in July on mold, agreeing that it can exacerbate

existing allergic and asthma conditions, but there is no conclusive evidence

that mold exposure may cause memory loss or lethargy, as some people claim.

And despite the ominous " toxic " label, scientists say it doesn't much

matter. Mold is mold--it's not healthy to live with it, no matter what

" toxic " chemicals it may have bubbled out from.

The CDC advises Americans not to waste their time sampling or testing mold.

" Sampling and culturing [molds] are not reliable in determining your health

risk. " Translation: Even if there are some complex strains of mold, it's

still a fungus primarily caused by excess moisture and should be killed with

bleach.

In an effort to protect developers and builders from lawsuits and claims,

Stanley Luhr, president of Pacific Property Consultants, a construction

consulting firm in San Diego, has been giving " Mold Bootcamp " seminars.

(Although the seminars have cost about $245, Luhr insists that he doesn't

profit off them.) Luhr has offered water intrusion seminars for more than 15

years, but his Mold Bootcamps have become a hit. In the last two years, he's

given 20 mold seminars that have been attended by 50-200 people, and he'll

do another six seminars before the year is over.

" We're trying to teach builders not to overreact, " Luhr says. " In many cases

builders are fixing things because they're being threatened with litigation

over something that is the homeowners responsibility. [A homeowner] might

have a leak, and instead of having it fixed, allows it to leak for a while,

and then threatens to sue the builder. Quite frankly, mold issues are not a

problem. They are the symptom of a problem. It's the media that's hyping

this up. "