We at FC&S viewed the news footage with horror after a deadly tornado swept through Joplin, Mo. on May 22. The devastation has already caused immediate deaths, injuries, and property damage. As the cleanup continues, new problems are arising.
Recently, news outlets have reported that a number of the people who were injured as a result of the tornado have been infected with a deadly fungal infection, mucormycosis, which occurs when a spore enters the body after a cut or other injury. According to the Centers for Disease Control (CDC), similar infections were found in some victims of the earthquake and the resultant tsunami in Japan. Although characterized as extremely unusual, the descriptions of events in the earlier cases are very similar to those identified in Mo. Emergency centers were able to identify victims’ infections as mucormycosis after their admittance and treatment for tissue injuries.
Although we may not be well-versed in the science of deadly fungal infections, the insurance industry has grappled with issues arising from mold for many years. Policy drafters have taken steps to control the amount of coverage available, but as new developments occur, there will surely be a renewed need to understand whether and how much insurance coverage is available to property owners who find mold growing in their buildings. Far more common than deadly infections will be the occurrence of mold in properties that could not immediately be made watertight after portions were blown away in the storm.
The Reality of Mold
We editors of FC&S have long held that mold damage occurring after covered fire or water damage is insured on homeowners’ and commercial property forms. The mold is a natural aftermath of such damage. Not all jurisdictions recognize this theory of efficient proximate cause—the fact that the ultimate damage, mold, is directly linked to the original covered damage—and therefore covered. Our stance is that mold that develops as a result of a covered loss is insured. Mold that develops gradually in a damp bathroom or attic area, for example, is excluded.
The recently filed 2011 ISO homeowners’ coverage form continues to exclude, as a cause of loss in itself, mold, fungus, or wet rot. However, the exclusion does not apply to hidden fungal damage arising from the escape of moisture from a plumbing device or pipes and drains off the residence premises. ISO also has filed a 2011 endorsement, HO 04 27, which provides a given amount of coverage for testing for, removing, or replacing parts of covered property that have been damaged by mold. The mold must arise as the result of a covered cause of loss.
Does Coverage Exist?
From a liability standpoint, three issues immediately come to mind when considering whether there would be coverage for illness or death that allegedly arose from the occurrence of fungi (mold). The first question is whether the illness or death can be scientifically proven to have been caused by mold. In the present cases in Joplin, there is proof that at least one person has died and other sickened by mucormycosis infections. Unlike some of the original claims that arose when mold issues first hit the insurance headlines, these recent incidents have scientifically been identified as being linked to a fungal infection.
The second issue is the application of medical payments coverage offered in both the standard personal and commercial general liability coverage forms. However, medical payments are not available to insureds or regular occupants or residents of the buildings where the mold occurred. Because of this, the medical bills of individuals who are diagnosed with respiratory infections allegedly related to mold, or the mucormycosis fungal infection, would not be eligible for goodwill medical payments. However, visitors diagnosed with a mold-related illness could qualify for medical payments.
The personal and commercial general liability (CGL) forms also exclude coverage for injury or damage arising from the release of pollutants, a term that enjoys a very broad definition on both types of liability form. Among other things, solid, liquid, thermal, or gaseous irritants and contaminants all qualify as pollutants under the terms of the form.
There is little question that, at the least, mold is an irritant and contaminant, but is it a pollutant? Many courts—but not all—have held that naturally occurring irritants and contaminants such as fungi or mold are not meant to be excluded via the pollution exclusion. These jurisdictions hold that the pollution exclusion precludes coverage for damage arising from man-made pollution. The policy definition, however, is silent on this issue, leaving it up to the courts to interpret. The FC&S opinion over the years has been that these forms would owe defense costs at a minimum, and quite often damage payments, for injury or property damage arising from mold contamination.
So what happens if claims are filed in the case of the illness and death of individuals who suffered mucormycosis infections after the Joplin tornado? Suits against healthcare providers for failing to clean wounds thoroughly would undoubtedly trigger medical professional liability policies when the allegations involve faulty treatment.
Additionally, there may be claims against remediation contractors or landlords for failing to sufficiently clean up damaged areas after the tornado, which allegedly led to the development mucormycosis and the subsequent bodily injury or death. Those claims—if they do occur—would at the least trigger defense costs. In all likelihood, they would also result in payments if the courts determine that the contractor or landlord was negligent in its efforts to clean up the damage.