Insurers fear mold incidents

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Insurers fear mold incidents

By Adolfo Pesquera

Express-News Business Writer

07/06/2001

A hearing last week before the state insurance commissioner attracted an

unusually large audience.

More than 500 people showed up to tell Insurance Commissioner José

Montemayor their stories about a plague in the workplace or in their homes.

The problem: molds.

A number of people, including the sister of Texas Attorney General

Cornyn, told Montemayor ways that exposure to molds had injured their health

or property.

The June 27 hearing in Austin was set in motion by a fascinating case.

Farmers Insurance requested the hearing after it lost a damage suit on June

2 in County.

A jury awarded $32 million to a Dripping Springs couple - Ron and

Melinda Ballard - when it found that the company failed to adequate and

swiftly cover repairs for a water leak.

The toxic mold stachybotrys, commonly known as black mold, ran amok in the

couple's 22-room mansion and affected their family's health.

Jurors found that the mold couldn't be expunged from the house; the mansion

would have to be leveled and rebuilt.

Farmers Insurance requested the hearing because it seeks to exclude mold

damage from homeowners' policies.

Policy restrictions already exist. Insurance companies can specifically

exclude mold in homeowners' policies unless the presence of mold can be

directly tied to structural defects.

Olivia Cornyn, sister to Texas Attorney General Cornyn, said the

hearing gave her a rare opportunity to speak her mind.

She said she's only recently regained her health after seven years of

illness.

For two of those years she was bedridden.

She blames her poor health on what are called mycotoxins, which are released

by molds and fungus, according to a lawsuit she and six other women filed.

The suit, which has been dismissed by a district court and is now on appeal,

claims the women were harmed by contaminated air at their workplace.

" The bloodwork done on me revealed that I had unusually high levels of

antibodies to 15 molds and funguses, " Cornyn said Thursday at her modest

North Side home.

It's ironic that sick building syndrome may be tied to more energy-efficient

building methods, some experts say. Better insulation can result in poorer

air circulation; buildings that don't " breathe " can become health hazards if

moisture gets in.

Janet Ahmad, president of Homeowners for Better Building in San ,

claims that a great many of the mold claims are the result of shoddy

building practices that allow leaks to occur.

For example, improperly built roofs let water contaminate sheetrock and

wood.

Steel reinforcement bars in concrete slabs may be allowed to come in contact

with copper pipes, allowing corrosion that eventually causes the pipes to

burst.

" This should be a wake-up call for the insurance industry to start

addressing prevention as a way to cut their losses, instead of refusing to

help victims, " Ahmad said. " The industry has an obligation to insist that

builders of new homes adhere to standards that insure homes are built free

of construction defects that contribute to the growth of mold. "

Rod Bordelon, attorney for the Office of Public Insurance Counsel - a

consumer advocacy agency that monitors and makes recommendations on

insurance rates - explained that while he is officially opposed to Farmers

Insurance's request to eliminate molds from coverage, the rise in the number

of claims is cause for concern.

" We're hearing from insurance companies that they are getting a lot more

claims, " Bordelon said. " The data I have doesn't actually support that.

Right now, the mold and mildew claims are jumbled together with other water

damage. "

In 1999, claims from water damage represented 4 percent of all claims

against homeowners' policies. By November 2000, they were 5 percent of all

claims.

" That's a pretty significant percentage, " Bordelon said.

Before considering any shift in its position, the agency wants more data

from insurance companies to determine how much of the water-damage claims

are attributable to mold and mildew, Bordelon said.

Fixing a contaminated site can require extensive work. Rock Jimenez, a

spokesman for Trinity Group, a local engineering and construction firm,

explains that they would treat the site the same as if they were conducting

an asbestos removal project.

Finding remedies can be costly and the only recourses mold victims have are

their insurance policies and the courts. Yet the courts have been reluctant

to embrace the concept of sick-building syndrome.

Olivia Cornyn had sued Honeywell Inc. and r Air Conditioning Inc., the

companies responsible for maintenance of the air quality in the building

where she worked. The case is on appeal before the 4th Court of Appeals.

Cornyn compares her situation to that of the canaries that have been used in

mines as an early warning to miners of toxic fumes.

" We are the canaries and we're singing away, " Cornyn said. " And we need

somebody to listen before we can't sing anymore. "

apesquera@...

07/06/2001