Family battles home insurer over mold outbreak

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Family battles home insurer over mold outbreak

By Robin Benedick

staff writer

Posted September 30 2002

When a pipe burst under the bathroom of their Davie home almost 16 months

ago, and Claudette Armstrong mopped up the water and paid a plumber

$300 to fix the pipe.

They thought that was the end of their problem, but it was the beginning of

their nightmare.

Two months after the leak, slimy black mold appeared on a closet wall in a

bedroom. It spread throughout the two-bedroom house, aggravating 11-year-old

's asthma and putting him in the hospital. Even Harry the dog got

sick.

The unmistakable stench of mildew permeated every room, finally forcing the

family into an apartment this past spring.

" No family should go through what we've been through, " said Claudette

Armstrong, 47, who cleans houses part time. " The mold got so bad you

couldn't breathe. You walked inside and your throat burned. We all got sick.

You can't go in now without a mask. "

Mold has been around forever, but only in recent years has it emerged as a

major financial and health problem nationwide. Texas and California lead the

country in insurance claims for mold, but Florida, known for its hot, wet

and humid climate, isn't far behind.

" Three years ago we had hardly any mold claims in this state, and now we're

seeing an explosion of them, " said Sam , vice president of the Florida

Insurance Council.

Stories about mold creeping through homes, schools and buildings have become

more common since last year when a central Texas homeowner won $32 million

in a lawsuit against Farmers Insurance over water damage and mold in her

mansion. The case is on appeal, but Farmers announced last week that it is

pulling out of Texas after losing hundreds of millions of dollars on mold

and water-damage claims. Other insurers are expected to follow, much as they

did after Hurricane ravaged South Florida in 1992.

In California, where the fungus frenzy is dubbed " the mold rush " by the

insurance industry, the growing number of mold claims has made it difficult

for builders to get insurance to construct new condos.

The surge in claims has fueled debate over who should pay for mold, which is

expensive to clean up, and how harmful it is.

Insurers predict the nationwide tab for mold cleanup will soon exceed the

billionsof dollars paid out for Hurricane claims.

In Texas alone, insurers have paid more than $1 billion for mold settlements

over the past two years, industry officials said. Texas homeowners now pay

an extra $444 a year in insurance premiums for mold coverage. Real estate

agents also warn buyers in Texas that they may have a tough time getting

homeowners' insurance because of the surge in mold claims.

In California, new laws require homeowners selling a house to disclose

whether it has had mold or water damage. In Florida, insurance companies

are required to pay for cleanup only if mold results from sudden water

damage, such as a burst pipe.

But the payouts in Florida are climbing as the number of claims and lawsuits

over mold increase. Insurers in Florida have asked the state Department of

Insurance to step in and either exclude mold from any coverage in

homeowners' policies, set limits on the amount of money they must pay out or

allow them to charge higher fees to cover cleanup costs. The state agency

has conducted public meetings on the issue.

Many scientists think mold problems are on the rise because of modern

construction methods. Houses are more airtight, making them susceptible to

mold growth. And powerful air-conditioning systems may spread mold spores

throughout the house.

" We've been getting a tremendous volume of calls about mold, " said

, an environmental scientist for the Broward County Health

Department. He said people should open windows a few minutes a day, even

with the air conditioner on, to let fresh air in the house.

At the heart of the debate is just how dangerous mold can be. Most mold is

harmless, like the fuzz growing on old bread or in the shower stall. But

more serious strains, often unseen behind walls and in air-conditioning

coils, produce toxic substances that can cause respiratory problems, rashes

and infections.

" There are very few mold claims I see that are actually valid, " said Los

Angeles lawyer Steve Henning, whose law firm is a leader in defending

insurance carriers against mold claims. He wrote a pamphlet for insurers

called Defending the Toxic Mold Claim.

Henning blamed the media for the hype over mold and for portraying it as a

hazardous substance. " It's really scaring people, " he said.

Fear is what eventually drove the Armstrongs from their Davie home in a

working-class neighborhood near University Row this past May.

The family had lived in the beige, concrete-block house since 1998 when a

pipe burst last summer, spewing water all over the floor. They contacted

their insurance company, Clarendon National, and waited for the company to

have the pipe fixed. They heard nothing. So after a month, the family hired

an adjuster to negotiate with Clarendon and paid $300 to fix the pipe. But

water apparently dripped inside the walls, and mold soon appeared in the

children's bedroom. Dark splotches showed up on a sofa, kitchen cabinets and

floorboards.

Although the adjuster negotiated a $4,800 initial payment from Clarendon,

the company made out the check to the wrong mortgage lender, and the

Armstrongs couldn't cash it. So Clarendon issued a replacement check in

January, but it said " final payment " on it. The Armstrongs refused to cash

that one.

In April, Clarendon sent an environmental inspector to the house. He

determined that cleanup would take four months and cost almost $45,000.

Still, Clarendon did nothing. So the Armstrongs hired Hollywood lawyer Lee

Schillinger, who is trying to get the company to make repairs. The family

also filed a complaint with the state Insurance Department, which is

investigating.

Clarendon has agreed to pay four months' rent, Schillinger said, and has

reissued a check that the Armstrongs will use to help pay their monthly $799

mortgage, which includes their insurance premiums, and $940 rent.

Armstrong, 46, is a brick mason, and the family is struggling financially.

Jon Palmquist, general counsel for Tower Hill Insurance, which represents

Clarendon, said the company has no comment about the Armstrong's claim.

" They've delayed and delayed and delayed, " Schillinger said of Clarendon.

" That's why there's so much mold. This family has doesn't have the means to

pay a mortgage and rent for long. "

Robin Benedick can be reached at rbenedick@... or 954-385-7914.

Copyright © 2002, South Florida Sun-Sentinel