Insurance Claims and Lawsuits From People Made Ill by Household Mold

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Insurance Claims and Lawsuits From People Made Ill by Household Mold

Aired April 23, 2002 - 06:20 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE

UPDATED.

CAROL COSTELLO, CNN ANCHOR: The insurance industry has been struggling with

losses from September 11th and the stock market. Now another problem is

spreading: insurance claims and lawsuits from people made ill by household

mold.

Our Casey Wian has the story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): McMahon's house looks

fine, but underneath the floor, behind the walls and on vents, mold is

growing. Her doctors suspect, but can't prove, mold is behind her health

problems, including blood clots in her lungs.

VICTORIA MCMAHON, HOMEOWNER: I run out of oxygen very quickly. I'm on a lot

of medication right now. Six months ago, I couldn't walk out to my mailbox

without feeling faint.

WIAN: McMahon is suing her homeowners insurance company, which says her

policy doesn't cover damage from mold. Whether lurking behind walls or out

in the open, some types of mold are known health hazards. Doctors estimate

about 20 percent of people, especially those with allergies, are vulnerable.

While there's no evidence of a significant increase in the number of health

problems linked to mold, the number of people seeking compensation is

growing. Residents of this condominium complex claim water leaks from shoddy

construction have spawned mold that's making them sick.

(on camera): Attorneys for developers estimate it will cost about $17

million to repair this complex. They're seeking $35 million in a lawsuit

against the building's developer and contractors.

(voice-over): That would eclipse the $32 million won by a Texas homeowner

last year. That case helped bring mold to the attention of homeowners and

attorneys.

ALEX ROBERTSON, ATTORNEY: People that had these symptoms all of a sudden

start looking around saying, " Maybe it's the chronic roof leak I've had and

that black stuff that's growing that I can't wash off with Clorox. Maybe

that is what's making my kid's asthma worse. " WIAN: Most homeowner's

insurance policies consider mold a maintenance issue and only cover mold

damage when it's the result of a catastrophic event, such as flooding from a

burst water pipe. The insurance industry blames the current rash of

mold-related lawsuits on marketing by lawyers and mold remediation

companies.

PETE MORAGA, INSURANCE INFORMATION NETWORK: It's obviously become an issue

that attorneys are finding very lucrative in terms of lawsuits. And the

lawsuits that we're seeing right now, with some of the lawsuits pending, are

astronomical.

WIAN: In Texas, mold-related insurance claims jumped 500 percent last year,

and homeowners' premiums are up 20 percent. Besides Texas, California,

Florida and New York are all hotbeds. Mold claims have been filed in every

U.S. state.

States are only now beginning to set standards for mold exposure, while

insurance companies are revising policies to limit their exposure to

mold-related lawsuits. In a few states, some carriers have even stopped

writing homeowners policies because of mold.

Casey Wian, CNN Financial News, Santa Ana, California.

(END VIDEOTAPE)

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