Mold claims are handled somewhat differently than other claimsbecause of the threat of adverse health effects. Either real orperceived, health risks can often add a sense of urgency, and theremay be immediate involvement of more experts than are typicallyinvolved in a property damage claim. This article addresses how toprocess third-party claims resulting from a construction defect, adefective product, or improper installation with ensuing mold toeither a residential or a commercial building.

The Three C's

Properly handling mold claims involves three essentials:coordination, communication, and cooperation. The lack of any oneof these steps in the process can lead to a claim file that ispotentially more expensive than necessary, not to mention moretime-consuming and frustrating for all parties involved, especiallythe building owner.

Once the adjuster receives the claim, the second and perhapsmost important step — communication — begins. It's imperative thatthe field adjuster contact the building owner or the propertymanager immediately so that the fact-finding can begin regardingthe location of the damage and the source of the waterintrusion.

If improper installation of plumbing or an appliance such as arefrigerator with water supply is suspected, then the adjusterneeds to obtain an accurate delivery or service date, along withthe name of the retailer, plumber, delivery service, and so on.During the initial phone call, the adjuster should try to ascertainif an emergency services contractor is involved or if one should beconsulted to provide water extraction and drying.

If the building owner or the property manager has not alreadyhired his own experts and the field adjuster works closely with anindoor air quality (IAQ) expert and remediation contractor, then itis always a good idea to immediately inform them of a claim thatpotentially involves mold. Should the adjuster determine during theinitial telephone conversation with the building owner that mold islikely involved, then a brief explanation of the IAQ testing andremediation should be given. It is also important to convey thepossibility that temporary relocation or lodging may need to bearranged.

Initial Inspection

Ideally, the field adjuster should complete the initialinspection alone with the building owner or the property manager assoon as possible. This enables the adjuster to establish aone-on-one rapport with the building owner. Arriving with aentourage of experts on the first visit will likely increase theanxiety level of the building owner and may lead him to believethat the situation is more serious than may actually be thecase.

The initial inspection should identify or confirm the source andlocation of the water intrusion, along with potential secondarysources, and identify areas where mold is found. At that time, thefield adjuster should obtain photographs, diagrams, and apreliminary scope. If the field inspection confirms the presence ofmold, then the claim-handling process should be explained to thebuilding owner in more detail. One should note that this is usuallyan opportune time for the adjuster to stress the need for patienceand cooperation on the part of the building owner while the claimprocess runs its course.

The adjuster's findings from the initial field inspection shouldbe shared immediately with experts. Additionally, an agreeable timefor IAQ testing and remediation contractor walk-through should bearranged no later than 72 hours from initial inspection. If aseparate contractor from the remediation expert will be doing thepost-remediation build-back repairs, now is a good time to involvethem as well as a contents cleaning contractor (if necessary) in apreliminary walk-through.

Cooperation and coordination are essential. The IAQ, remediationcontractor, and build-back contractor, if separate from theremediation contractor, should ideally do the inspection togetherand with the building owner so that containment boundaries can beestablished if IAQ preliminary testing warrants it. That way, allparties involved can gain the same visual reference, discuss theissues, and answer any questions from the building owner at thesame time. This will not only simplify future communication amongeach other, but also will facilitate smoother communication withthe building owner.

It should be stressed to the IAQ expert that mold tests are tobe submitted to a lab within 24 hours, preferably the same day,with a protocol to be developed within 72 hours. Once the mold testresults and protocol are received from the IAQ, the adjusterreviews and resolves any related questions or concerns immediatelyand forwards the protocol to the remediation contractor for reviewand estimation.

The adjuster should remind the remediation contractor that a bidis expected within 48 hours. Once the remediation estimate isreceived by the adjuster, it should be reviewed right away. It iscrucial that any questions or concerns be raised with theremediation contractor at this time. If no concerns exist, theadjuster should give the go-ahead or seek authorization forremediation to begin. Both the adjuster and the remediationcontractor should communicate this to the building owner in thelikely event that the building owner has questions for both partiesabout the remediation.

During remediation, the adjuster will arrange a secondwalk-through with the build-back contractor so that a finalbuild-back scope can be completed. Usually near the end ofremediation is a good time to do this, as any surprises that mayarise during remediation have probably already occurred and canthus be noted in the final build-back scope.

Because of scheduling conflicts, this walk-through often cannotbe done while the remediation contractor is still at the site.However, every effort should be made to coordinate the walk-throughwith the build-back contractor while the remediation contractor isstill on-site, as this allows the build-back contractor to get abetter perspective of the job and gather feedback from anothertradesman who has already spent time on the project. This is also agood time for any build-back subcontractors to walk the job, ifnecessary. As with the remediation estimate, the build-backestimate should be received within 48 hours to allow ample time forreview and discussion between the adjuster and contractor. Thisallows for build-back to begin once clearance is issued.

The remediation contractor needs to contact the adjuster a fewdays prior to completion of the job so that clearance testing canbe arranged. The remediation contractor may contact IAQ directly toarrange for testing and should advise the adjuster as to the dateand time. As with the initial walk-through, it is important to havethe remediation contractor present during clearance testing toprovide the opportunity to promptly address any issues that preventclearance. This is conducive to a seamless transition tobuild-back.

Putting It Back Together

Once clearance has been issued, the adjuster will inform thebuild-back contractor so that the build-back phase can begin atonce. The adjuster should arrange a follow-up inspection duringthis period to discuss any changes or new developments. He shouldalso obtain an approximate completion date. This estimatedcompletion date should then be communicated to the building ownerso that arrangements for re-occupancy can be initiated.

After build-back is completed, a walk-through should be arrangedwith the building owner and build-back contractor. Any issuespresented by the building owner should be addressed immediately ifpossible, especially if they prevent re-occupancy of the buildingspace. The adjuster can solicit feedback from the building ownerabout the experts employed during the course of the claim.Coordination of return occupancy during the final build-back phaseshould be attempted if all parties are agreeable and it isotherwise safe to do so.

With claim costs constantly rising, especially if litigation isinvolved, it is a good idea to keep the three C's in mind whenprocessing all claims, but especially the more complex claims suchas those pertaining to mold.

Mark Henderson, CPCU, AIC, is an independent adjuster andclaim consultant in Seattle, Wash. He can be reached [email protected].