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With increasing frequency, people are incurring substantial property damage or suffering from severe physical maladies as a result of mold.

If you think these kinds of claims are covered by insurance, and haven't scrutinized your policy's precise wording or language, you may be woefully mistaken.  More often than not, insurance companies are disclaiming liability coverage for mold-related incidents and will rebuff reimbursement efforts (unless intertwined with a covered event).

A case in point is Siegel v. Chubb Corp.  In that particular dispute, as a result of "high level of toxins in the air, caused by mold," an insurer advanced its policy holder $120,000 in living expenses "without prejudice" to the company's right to seek the return of those funds in the event the incident later proved to be an excluded event.

As you may have guessed, the company eventually concluded that the policy did not apply to losses "caused by" mold and asserted a right to a refund of the proceeds.  The New York County Supreme Court concurred and awarded the insurer a money judgment in the amount of  $120,000.  On appeal, the Appellate Division, First Department, affirmed noting as follows:

The policy excludes "any loss caused by ... mold." The term "caused by" is defined as "any loss that is contributed to, made worse by, or in any way results from that peril." Plaintiffs' assertion that the loss was caused not by mold but by toxins in the air is unavailing, as mold is the "efficient proximate cause" of the insured's loss ... Moreover, there is no evidence that the mold was caused by any leak, which plaintiffs argue would be a covered occurrence.

That had to hurt!

For a copy of the Appellate Division's decision in Siegel v. Chubb Corp., please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_07819.htm

For more information about mold, visit the U.S. Environmental Protection Agency's website: http://www.epa.gov/mold/moldresources.html