MOLD. Just the word is enough to bring about images of dank and damp basements that no one wants to enter. The truth is, not all mold is dangerous. In a commercial property, however, it is important to keep mold at bay and remove any sightings as quickly as possible. If left untreated, tenants can become ill, leading to larger problems like lawsuits if the issue becomes big enough.
It’s important to understand what your insurance covers and what your rights are as a building owner.
What is Covered by Commercial Property Policies
In an insurance policy specifically created for your business, your building and personal property will be covered in the event of the disaster.
Some insurance companies will use forms developed from the Insurance Services Office (ISO) and follow a standard format for most policies.
In a policy, the insurance company will draw up what is covered under the insurance. This is typically called “covered property”, while exclusions are listed as “excluded property”. Normally, commercial property insurers have a mold, or fungus, exclusion written in. This means that any loss or damage caused by growth, presence, or spread of fungus will not be covered under the insurance policy.
The standard ISO policy does contain three exceptions to this rule:
- If the fungus or mold is a result of fire or lightening, the damage will be covered.
- You have a specified cause of loss in the policy that is specifically defined . This can include hail, smoke, vandalism, etc – and these circumstances will most likely not result in fungus.
- Fungus that results from a cause (specified in the clause) other than fire or lightening. This clause is called the “limited fungus coverage”, and we’ll discuss this below.
Limited Fungus Coverage
Under this coverage, the ISO has written that fungus cleanup, damage, and repair is covered. Loss or damage by fungus resulting from a specified cause of loss will be covered, but not if that cause happens to be flooding. The only way that fungus or mold damage caused by flood would be covered under insurance is if your policy includes flood coverage.
Under the Limited Fungus Coverage, there are only two events in the specified causes of loss that are likely to produce fungus. These include:
- Water Damage
- Leaks from fire extinguishing equipment
If either of these events results in the formation of fungus or mold, the ISO Limited Fungus Coverage will cover:
- Physical loss or damage caused by fungus, including cost of removing the fungus itself.
- Cost to replace and remove any parts of the building that need to be removed to get access to the fungus for removal.
- Testing of the fungus to make sure the mold is completely removed.
In addition to having commercial coverage, liability coverage is a must as well. In a case in 2001, a couple in Texas won $32 million dollars in a mold related lawsuit. This was not due to “toxic” mold, but due to damage from leaky pipes. The thing is – mold is not toxic. Some mold spores can be harmful to humans, but toxic is a misconception.
Regardless, tenants, customers, employees – anyone that is using your commercial building can sue you for injuries related to mold if it is found in the building. Commercial properties tend to see less lawsuits than residential landlords, but the risk is still present.
Contractors may also be sued when buildings they’ve constructed develop water leaks, leading to mold growth. Liability insurance will help cover these costs and protect the companies from further damages.
Call Alpha Omega Disaster Restoration if you suspect that your building may be mold infested. We help businesses stop the mold problem as quickly as possible, and keep down time to a minimum, keeping tenants and customers happy. We’re on call 24 hours a day, and have the skills needed to get the job done.