Managing Mold Problems

The statistics behind mold's notoriety both inform and inflame:

• Homeowner insurance claims for mold damage topped $18 billion in 2001 with payouts of $2.5 billion.
• Thirty-five states now allow insurers to exclude mold coverage from all homeowners' policies.
• Premiums on the few policies left increased 10 to 15 percent this year.
• About 10,000 mold-related court cases have been filed nationwide in the last three years.
• Several high-profile cases garnered multimillion-dollar damage awards, sparking a cottage industry in legal and consumer activism around mold-related issues.

Eliminating the mistakes that link facility designers and owners to the presence of harmful indoor mold may start and end with prevention. However, with the risk and reality of the mold debate at such close range, it is important to hear from experts outside the industry who can comment on the "how and why" of managing mold.

Valued Viewpoints

What do building professionals and the industry as a whole need to know about the impact of mold-related problems on their business survival? How can they address issues that arise out of sensational media coverage and a lack of clear guidelines? Insights from professionals in risk management, medical research and the law provide some answers.

Noted medical microbiologist Dr. Jon Woods researches the health impacts of mold exposure. Dr. Stephen Redd serves as chief of the CDC's Air Pollution and Respiratory Health Branch. David Dybdahl is a risk-management consultant specializing in environmental insurance issues. And attorney James Butler is an expert in construction and environmental law. Each of them assesses the topic of mold exposure from a unique perspective as they comment on the role and responsibility of the building industry.

Knowing Mold

Molds are fungi belonging to a large kingdom of organisms that include mushrooms, mildew, and yeasts. Species of mold grow everywhere in nature and with alacrity under the right conditions where it is consistently warm and damp. Identification has been made of more than 1,000 kinds of indoor mold. They spread and reproduce via spores that easily become airborne.

These organisms have been under the microscope, literally, for the better part of a century, says Dr. Woods, an associate professor of medical microbiology and immunology with the University of Wisconsin–Madison School of Medicine.

Dr. Woods notes that researchers know a great deal about thousands of mold species. Nonetheless, no definitive evidence exists to support a casual link between mold and many of the health effects attributed to it. Most investigators in the field remain skeptical about the "hidden dangers of mold," he says, and tend to see the debate as more social and legal than scientific. "Florid fungal growth may be unpleasant, but we have no proof magic toxins are appearing all of a sudden to make otherwise healthy people fall ill."

The strongest link so far between a concentration of airborne indoor mold and illness is as a risk factor for people with asthma or chronic respiratory disease. Other adverse health effects, such as memory loss and lethargy, remain unproven.

Dr. Redd, lead CDC scientist on air pollution and respiratory health, explained as much in testimony before a congressional committee last July. He reported that mold spores appear to trigger allergic symptoms much the way dust, pollen, and other allergens do. Figuring out which ones and at what exposure level is difficult.

"Many different species of mold could be responsible for these symptoms, so it is a challenge to sort out which to pinpoint," Dr. Redd says. "It is also tough to identify mold as the main culprit when other allergens could be affecting symptoms for someone who is susceptible."

Federally-funded research into this area or attempts to set exposure levels awaits a report from the National Institute of Medicine that summarizes evidence to date on the health effects of mold. Dr. Redd and others hope this snapshot of current findings will guide decisions about research targets, quantify the risks of exposure, and improve the response of state and local health departments.

Landing in Litigation

Attorney James Butler's leading advice for building industry professionals worried about losses due to mold claims is to deal with the problem before it becomes a problem.

He points out that the noise around laying blame for damages suggests there is no excuse for embarking on a design or breaking ground without scrutinizing every aspect of the process. "Architects need to design with an awareness of risks and builders need to document what is done during construction to guard against water intrusion." Precautions taken early can pay off in preventing serious outbreaks of mold, but they also establish the limits of liability in the event of a claim.

A partner in the Atlanta-based firm of Smith, Currie and Hancock, Butler says since he serves as counsel for both sides on this issue, he cannot comment on the merits of any single case. All the same, he warns building designers and owners that the legal industry is out ahead in testing the limits of belief about the health effects of exposure to mold. Personal injury claims have not been proven so far, but claimant stories attract heavy media attention. Property damage claims have been settled, however, and for substantial amounts.

Industry response, he notes, has been to reallocate risks, change contracts and insurance coverage, or reorganize as a limited liability company. "Long-term, the strategy has to be changing the industry's approach to their work and a renewed commitment to working smarter."

Would industry standards make a difference? "I don't think so," responds Butler. "Anything established is bound to be inadequate, and when someone does not meet the standards, it creates a new opening for liability." Like what HVAC contractors faced over standards for indoor air quality, he terms such an idea a "no-win" situation.

Insuring Against Loss

Running risks is part of operating any business. Insuring against losses should the risks outrun the business is standard practice. It is possible for facility designers, builders, and building owners to take out liability coverage related to indoor, airborne mold, says David Dybdahl, senior consultant with American Risk Management Resources Network. But things have become a lot more complicated.

One reason is a fractious climate of claims alleging infestations of mold caused byshortcomings in building design, construction, or maintenance. Dybdahl, who has advised on insurance programs for some of the toughest global environmental risks, reports that even without verifiable health effects, in a few short years mold problems have created more claims than Superfund and asbestos combined. "The insurance industry saw this coming and has little exposure now thanks to the mold exclusions they have added to policies for the past year," he says. That means homeowners and building residents must look elsewhere to seek restitution for a real or perceived loss.

Thus, facility owners, architects, engineers, and builders find themselves vulnerable to liability claims for mold-related damages. And without specialized environmental insurance, observes Dybdahl, they will find themselves uninsured when it comes to these mold claims.

The fact that the vast majority of risk advisors are not experts on environmental coverages is another reason for industry professionals to feel insecure. "New products covering mold damage are under development all the time," Dybdahl explains. "The challenge is finding an insurance agent who understands what's out there and can plan a program that does not exclude environmentalliabilities, including policies that cover the past."

After property and homeowners policies deny mold claims, he foresees the second wave of claims will hit professionals targeted as a responsible party. Already there are instances where a builder or architect assumed they were covered but were not. Such a miscalculation puts everyone, including the agent, in the line of fire. Premiums may have tripled, and there may be confusion over language, but effective coverage exists. Dybdahl's firm hosts a website for the nonprofit Environmental Risk Resources Association (www.erraonline.org) where insurance consumers can find information on insurance products that cover mold damage and links to underwriters.

Avoiding the Risk

No surprise, Dybdahl recommends prevention as the best insurance. "Managing mold is relatively simple from a risk management standpoint," he says. "Avoid design defects and construction defects. Use compatible materials and eliminate variations on job sites. Since water intrusion is the enemy, build it dry from the start, making sure circumstances that breed the problem do not occur."

Butler concurs and adds he sees the mold issue prompting development of new and better building materials, along with a willingness to test protocols and verify that materials and methods used in construction actually forestall the growth of mold.

On the subject of standards, Dr. Woods says an excess of unsound assertions about the impact of mold makes the marketplace rife for exploitation. "Plenty of people may claim to read exposure levels that haven't yet been set and offer surefire remediation services that are suspect at best." He concludes it is safer to be serious about setting high standards of construction and maintenance.

Public and media reaction to presumed health effects of airborne mold caught everyone off guard. Ill-prepared to respond to a problem that is hard to define or measure, facility designers and owners find it is not business as usual. Many inside and outside the industry feel it is time to regain lost ground.

David Dybdahl, Jon Woods, and James Butler are among the distinguished speakers who contribute their expertise to a course on preventing and managing mold problems. Offered by the Department of Engineering Professional Development at the University of WisconsinÐMadison, the next session takes place June 12-13, 2003.

Learn more and sign up by going to http://epdweb.engr.wisc.edu/webE898 or calling 800-462-0876.

Additional Sources: Center for Disease Control Web site, The Wall Street Journal, The New York Times.

Written by Mary Maher

This article is based upon work supported by the University of Wisconsin–Madison Department of Engineering Professional Development. It is for general information and distribution. It is not intended to provide specific solutions or advice for specific circumstances, which should be sought from appropriate professionals.

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