Video - The Curse of Black Mold

[Guest guest]

SPECIAL REPORT: The Curse of Black Mold

by Tim Ragones, News 3 Investigative Reporter

November 24, 2006 - 7:53PM

WWMT - Kalamazoo,MI,USA

http://www.wwmt.com/engine.pl?

station=wwmt & id=32461 & template=breakout_local.html

- BATTLE CREEK (NEWS 3) - Mold is a fact of life, but when certain

types take hold in your home, removing them is in many ways a

nightmare.

News 3 has followed the story of the Koch family of Battle Creek for

more than five years, since they first found black mold growing all

over the home. It hasn't taken that long to clean it up, but they're

still fighting with their insurance company over who should pay.

And in Michigan, who pays for the damage is one very real part of

the curse of black mold.

" And this, that's loose like this, that's all water damage, " says

Terri Koch, as she showed News 3 her home. " That's all water damage.

When you see dark spots, that's where water soaked in. "

Home construction is common, but for the Kochs, the work going on

inside and out is a little different. They're fixing mistakes, they

say, their insurance company made.

" Farm Bureau put us through a rough ride, " Koch says, " a real rough

ride. "

The ride started December 24, 2000 - Christmas Eve. A winter storm

brought ice dams and forced water under the shingles on their roof.

The Kochs removed them, but water had soaked into the walls.

" We had wet insulation inside dark, closed walls, " Koch says, " which

was the perfect breeding ground for stachybotrys. "

It was black mold. Inspectors found it when the News 3 I-Team

followed them inside the Kochs' home in the spring of 2001. But the

Kochs thought their homeowners' insurance policy would help cover

any and all damages.

" You pay your premiums, you expect that policy to be there for you, "

says Koch, " and it's not. "

Not when you're talking about mold. Not since 1997 when the Office

of Financial and Insurance Services (OFIS) issued a form exemption

order.

" A part of that includes the exclusion of mold losses, " says

Commissioner Watters.

That state office can revoke insurance agents' licenses and impose

fines, but with exemption, it can't offer much in cases involving

mold.

" Typically, what we see is mold being covered indirectly, " Watters

says, " in conjunction with other types of losses. "

Like ice damming - that's what the Kochs argued.

And in October 2003, a Calhoun County jury agreed. It ordered Farm

Bureau Insurance to pay them more than 181-thousand dollars for

negligence and trespass.

But in July 2005, the Court of Appeals reversed the decision.

" And to have it turn around on us like that, it was just a brick in

the face, " says Terri Koch. " It was just such a shock. "

But News 3 looked at other Court of Appeals rulings involving mold

and found it shouldn't have been a shock. Homeowners have argued ice

damming as a cause and tried to categorize mold as a pollutant.

It hasn't worked. The insurance companies have won.

" In most mold cases it's not an event that causes it, " says Phil

Yeager, who has represented Farm Bureau in several mold cases. " It's

not a covered peril that causes it. It's something else. "

Yeager says ice damming isn't a covered event under most homeowners'

policies because it doesn't cause any noticeable damage.

" The damage that occurred to the Kochs' home occurred in their

efforts to get rid of the ice damming and the ice dam situation, "

Yeager says. " And that caused damage to the structure. "

But the Kochs' attorney says Farm Bureau took months to fix the

damage. He says it was no different than another negligence case

where an insurance company tried to stop a water leak, but spread

mold by tearing open a bedroom wall.

In that case, the Court of Appeals ruled for the homeowner.

" I think it's a distinction without merit, let's put it that way, "

says Van Hatch, the Kochs' attorney. " They're both equally bad. "

But this summer, the state Supreme Court decided not to review the

Kochs' case.

" We knew then it was over, " Koch says. " You don't go back after

that. It's done. "

The mold was gone, but the legal battle had left the family

bankrupt. Since this started, Farm Bureau had doubled its

homeowners' insurance premiums in Michigan, from about $52 million

to more than $122 million. Now the company is trying to get back

court costs from the Kochs - about $55,000.

It's a family that's just trying to make their home liveable again.

" The only thing we have left is each other and they're still coming

back for more, " Koch says.

A federal bankruptcy court judge will decide if Farm Bureau can

collect on those court costs.

Farm Bureau's attorney says the industry has shifted since the Koch

case began. Some homeowners' policies now include limited coverage

for mold damage, anywhere from $5,000 to $25,000.