Insurance and Mold Litigation
A Toxic Pill to Swallow
By Alan R. Lyons and Mary Ellen Shuttleworth
While panic and alarm are not warranted, the time is now for real estate owners, developers, lenders and borrowers to begin to pay attention to toxic mold and their potential liability for property damage or personal injury. Though the nationwide mold discussion chronicles back to 1995, when the Centers for Disease Control (“CDC”) linked a cluster of child-deaths in Cleveland to black mold, new momentum is pushing the toxic mold issues to the forefront. Verdicts have fallen on the shoulders of insurance companies and property owners alike, leaving them to bear costs associated with the multi-million settlements. It is undeniable that the mold debate is highly controversial, but it is still questionable whether mold litigation is going to take off in New York. While the debate lingers on, recent multi-million dollar verdicts and settlements make a thoughtful discussion on mold timely.
Currently there is no coverage for mold in most of today’s standard liability insurance policies. It is available for purchase, but typically at a high price. Obtaining mold coverage is advisable in certain, but not all, circumstances. This article will address the factors that real estate owners, developers, lenders and borrowers should consider when assessing their exposure to mold litigation and whether or not to purchase mold liability coverage.