Mold claims are handled somewhat differently than other claims because of the threat of adverse health effects. Either real or perceived, health risks can often add a sense of urgency, and there may be immediate involvement of more experts than are typically involved in a property damage claim. This article addresses how to process third-party claims resulting from a construction defect, a defective product, or improper installation with ensuing mold to either 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 one of these steps in the process can lead to a claim file that is potentially more expensive than necessary, not to mention more time-consuming and frustrating for all parties involved, especially the building owner.

Once the adjuster receives the claim, the second and perhaps most important step — communication — begins. It's imperative that the field adjuster contact the building owner or the property manager immediately so that the fact-finding can begin regarding the location of the damage and the source of the water intrusion.

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

If the building owner or the property manager has not already hired his own experts and the field adjuster works closely with an indoor air quality (IAQ) expert and remediation contractor, then it is always a good idea to immediately inform them of a claim that potentially involves mold. Should the adjuster determine during the initial telephone conversation with the building owner that mold is likely involved, then a brief explanation of the IAQ testing and remediation should be given. It is also important to convey the possibility that temporary relocation or lodging may need to be arranged.

Initial Inspection

Ideally, the field adjuster should complete the initial inspection alone with the building owner or the property manager as soon as possible. This enables the adjuster to establish a one-on-one rapport with the building owner. Arriving with a entourage of experts on the first visit will likely increase the anxiety level of the building owner and may lead him to believe that the situation is more serious than may actually be the case.

The initial inspection should identify or confirm the source and location of the water intrusion, along with potential secondary sources, and identify areas where mold is found. At that time, the field adjuster should obtain photographs, diagrams, and a preliminary scope. If the field inspection confirms the presence of mold, then the claim-handling process should be explained to the building owner in more detail. One should note that this is usually an opportune time for the adjuster to stress the need for patience and cooperation on the part of the building owner while the claim process runs its course.

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

Cooperation and coordination are essential. The IAQ, remediation contractor, and build-back contractor, if separate from the remediation contractor, should ideally do the inspection together and with the building owner so that containment boundaries can be established if IAQ preliminary testing warrants it. That way, all parties involved can gain the same visual reference, discuss the issues, and answer any questions from the building owner at the same time. This will not only simplify future communication among each other, but also will facilitate smoother communication with the building owner.

It should be stressed to the IAQ expert that mold tests are to be submitted to a lab within 24 hours, preferably the same day, with a protocol to be developed within 72 hours. Once the mold test results and protocol are received from the IAQ, the adjuster reviews and resolves any related questions or concerns immediately and forwards the protocol to the remediation contractor for review and estimation.

The adjuster should remind the remediation contractor that a bid is expected within 48 hours. Once the remediation estimate is received by the adjuster, it should be reviewed right away. It is crucial that any questions or concerns be raised with the remediation contractor at this time. If no concerns exist, the adjuster should give the go-ahead or seek authorization for remediation to begin. Both the adjuster and the remediation contractor should communicate this to the building owner in the likely event that the building owner has questions for both parties about the remediation.

During remediation, the adjuster will arrange a second walk-through with the build-back contractor so that a final build-back scope can be completed. Usually near the end of remediation is a good time to do this, as any surprises that may arise during remediation have probably already occurred and can thus be noted in the final build-back scope.

Because of scheduling conflicts, this walk-through often cannot be done while the remediation contractor is still at the site. However, every effort should be made to coordinate the walk-through with the build-back contractor while the remediation contractor is still on-site, as this allows the build-back contractor to get a better perspective of the job and gather feedback from another tradesman who has already spent time on the project. This is also a good time for any build-back subcontractors to walk the job, if necessary. As with the remediation estimate, the build-back estimate should be received within 48 hours to allow ample time for review and discussion between the adjuster and contractor. This allows for build-back to begin once clearance is issued.

The remediation contractor needs to contact the adjuster a few days prior to completion of the job so that clearance testing can be arranged. The remediation contractor may contact IAQ directly to arrange for testing and should advise the adjuster as to the date and time. As with the initial walk-through, it is important to have the remediation contractor present during clearance testing to provide the opportunity to promptly address any issues that prevent clearance. This is conducive to a seamless transition to build-back.

Putting It Back Together

Once clearance has been issued, the adjuster will inform the build-back contractor so that the build-back phase can begin at once. The adjuster should arrange a follow-up inspection during this period to discuss any changes or new developments. He should also obtain an approximate completion date. This estimated completion date should then be communicated to the building owner so that arrangements for re-occupancy can be initiated.

After build-back is completed, a walk-through should be arranged with the building owner and build-back contractor. Any issues presented by the building owner should be addressed immediately if possible, especially if they prevent re-occupancy of the building space. The adjuster can solicit feedback from the building owner about the experts employed during the course of the claim. Coordination of return occupancy during the final build-back phase should be attempted if all parties are agreeable and it is otherwise safe to do so.

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

Mark Henderson, CPCU, AIC, is an independent adjuster and claim consultant in Seattle, Wash. He can be reached at mhend@att.net.

Special Reports /

The Fungus Among Us

Related Stories

Recommended For You