Includes copyrighted material of Insurance Services Office, Inc., with its permission.
February 29, 2016
Summary: The water crisis in Flint, Michigan, brought the subject of lead poisoning to the forefront of the news. It began in April 2014 when Flint changed its water supply but did not apply corrosion control treatment to the water, which allowed the water to leach lead from the pipes and poison the residents, particularly the children.
Along with lead in pipes, lead paint has been a known cause of concern for several decades. Rental dwellings often have lead issues. Because of this, ISO provides some state-specific forms that either exclude or provide minimal coverage. Maine, Massachusetts, and Maryland all have lead-related endorsements. This article focuses on the dwelling property coverages and exclusions, although there are similar endorsements for homeowners and commercial properties. The nature and coverages are similar.
Topics covered:
Lead Poisoning Exclusion – Maine, DL 24 43
Lead Poisoning Exclusion – Massachusetts, DL 24 41
The widespread use of lead goes back to Roman times. In ancient Rome, lead was considered the father of all metals, used for a variety of uses from dishes, pots, and pans to face powders, rouges, mascaras, paints, a condiment for seasoning food and disguising inferior wine, and even as a spermicide. The vast network of plumbing was with lead pipes. While aware that it could cause serious health problems, they minimized the hazards, not realizing that long-term limited exposure was still very dangerous. Madness, sterility, and dementia were common results of lead poisoning. During the Middle Ages, alchemists tried to turn lead into gold, among other things, and it was frequently used to poison leaders so relatives could take their place. As time progressed, lead began to be used in weapon making, and later fuels and pipes.
In the early twentieth century lead was used in paints that were used on furniture, walls, cribs, and other items. As early as 1904 an Australian physician made the connection between lead paint and lead poisoning in children. It causes convulsions, encephalopathy, nervous system damage, delayed development, and other conditions, including death. It tastes sweet so children may put lead chips or toys with lead dust in their mouths. By the early 1920s, countries began banning the use of lead paint indoors; the United States did not ban it until 1978, leaving many still exposed, especially in older houses. This is where the exclusions come in. An insured cannot be liable to himself for having lead paint in the home, but he is certainly liable to tenants to provide a safe environment.
The EPA recommends having homes inspected for lead under the following conditions:
·Your child has been diagnosed with lead poisoning.
·You live in a home built before 1978 and children will live there.
·You are about to remodel or do anything that will disturb or generate lead based paint dust and chips.
·You are buying or renting a home. Federal law allows buyers to test to determine the presence of lead hazards.
·You are concerned about possible lead exposure.
The EPA also provides resources to help individuals find risk assessors, inspectors, and abatement professionals.
Under Exclusions, Paragraph F. Coverage L Personal Liability, Exclusion 7. is added:
7.”Bodily injury” to a person, caused by an “occurrence” of lead poisoning, starting:
a.31 days or more after either the State of Maine Department of Human Services or a lead inspector licensed by that department has given notice of the existence of an environmental lead hazard to either you or any person authorized to enter into a residential rental agreement on behalf of you and ordered that the lead-based substances at the Described Location be removed, replaced or securely and permanently covered within 30 days of receipt of the notice; or
b.Upon expiration of an extension of that order granted by the Department of Human Services or a lead inspector licensed by that department.
This exclusion does not apply to “bodily injury” which starts after the Department of Human Services states that the environmental lead hazard described in the notice no longer exists.
All other provisions of this policy apply.
Analysis
The exclusion is for bodily injury as a result of lead poisoning. Because an insured may have inherited a home or just decided to rent out an older home, the lead liability exclusion does not apply until thirty-one days after the Department of Human Services or a lead inspector has given notice to the insured or anyone managing the property that a lead hazard exists in the dwelling and that it needs to be removed, replaced, or securely covered up within thirty days of receipt of the notice. This gives the insured time to address and correct a problem he did not know he had until the inspection. If the insured does not follow through on the requirements and correct the issue in the time allowed, the exclusion is then in force. Once the hazard has been removed or remediated, the exclusion no longer applies. Any injury from lead poisoning would be covered, although it is highly unlikely to occur. The exclusion is not a mandatory form, but underwriting may require it on rental dwellings of a certain age where lead exposure is possible.
DEFINITIONS
With respect only to the provisions of this endorsement, Definitions Paragraph B.2. “bodily injury” in Personal Liability form DL 24 01 attached to this policy is replaced by the following:
2.”Bodily injury” means bodily harm, sickness or disease arising out of lead poisoning, including required care, loss of services and death that results:
EXCLUSIONS
Paragraph F. Coverage L . Personal Liability, Exclusion 7. is added:
7.”Bodily Injury”:
a.Resulting from an “insured's” gross or willful negligence; or
b.Caused by the presence or exposure of lead in or on any of the following:
(1)A residential unit, including common areas used in connection with such unit,
that is rented, or held for rental, to others, in any one to four family residential
building built before 1978, provided that the building is owned by an “insured”;
(2)A residential unit, including common areas used in connection with such unit, in any condominium or cooperative residential building built before 1978, provided that such unit is owned by an “insured” and rented, or held for rental, to others;
(3)Any other structure owned by an “insured” and rented, or held for rental, to others which is at the same location as any residential building described in Paragraph b.(1) or (2) above; or (4) Appliances, furnishings and fixtures, other than plumbing fixtures, owned by an “insured” and rented, or held for rental, to others and contained in or on a residential building or other structure described in Paragraph b.(1), (2) or (3) above.
Exclusion 7.b. above does not apply to:
(1)”Bodily injury” which occurs on or after the date a lead inspector, authorized to do so under the Massachusetts Lead Law, issues:
(a)A Letter of Interim Control or its equivalent.
However, this exception to Exclusion 7.b. applies only to such covered unit(s), or to such other covered property, to which the letter applies and only for the period of time such letter is in effect;
or
(b)A Letter of Compliance or its equivalent.
However, this exception to Exclusion 7.b. applies only to such covered unit(s), or to such other covered property, to which the letter applies;
(2)”Bodily injury” which occurs within 14 days after an “insured”, or a managing agent for an “insured”, is notified by an authorized lead inspector of the need to bring any of the property, described in Paragraph 7.b. above, into compliance with the provisions of the Letter of Interim Control;
(3)”Bodily injury” which occurs within any extension to the 14 day period described in (2) above, which is granted by the lead poisoning control director, local code enforcement agency or board of health, or by judicial order, except “bodily injury” for which an “insured” is strictly liable under the Massachusetts Lead Law; or
(4)”Bodily injury” which occurs because of exposure to lead which exposure occurs during a period ending 90 days from the date an “insured” took title to the real property described in Paragraph g.(2) above if such “bodily injury” is caused by the presence or exposure of lead in or on that real property.
However, this exception to Exclusion g.(2) applies only if an “insured”, within 90 days from taking title, complies with the requirements of the Massachusetts Lead Law that apply to new owners.
You agree to let us or our agent know, as soon as practicable, when you receive a Letter of Interim Control or Letter of Compliance, or the equivalent, and to provide us with a copy of such letter, upon our request.
All other provisions of this policy apply.
Analysis
The exclusion first redefines bodily injury in reference to the exclusion. Bodily injury is defined as harm, sickness, or injury arising out of lead poisoning. Exclusions are then added. The first exclusion is for gross or willful negligence. “Gross negligence” is often defined as serious carelessness or a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both. This is just short of an act intended to do harm. Such carelessness is not insurable.
Also excluded is injury caused by the presence or exposure of lead in or on a residential unit, including common areas, that is rented or held for rental in either a one to four family residential building or a condominium or cooperative built before 1978 that is owned by an insured and rented to others. Remember 1978 is when lead paint was banned in the United States, so buildings constructed after that are not a hazard. Likewise any other structures on the same premises as the residential buildings are excluded, and any appliances, furnishings, and fixtures other than plumbing that are owned by the insured and rented to others and contained in the aforementioned rental dwellings are excluded as well.
There are some exceptions to the exclusions. An exception applies to injury that occurs after the date when an authorized lead inspector issues a Letter of Interim Control or a Letter of Compliance or their equivalents for the units specified in the letters, and only for the duration the letters are in effect. The Letter of Interim Control gives the owner one year to address the issues that were found upon inspection. The issues that fall under the Letter of Interim Control are urgent hazards, such as chipping, peeling, or loose paint, windows with lead paint that shed chips or dust, household dust containing a high lead level, and others.
Another exception is for injury that occurs within fourteen days after an insured or his managing agent have been notified by a lead inspector that the property needs to be brought into compliance with the provisions of a Letter of Interim Control. The fourteen days lets the insured hire professionals to do the work needed. Also if an extension is granted to the first fourteen days, injury during that time is excepted unless the insured is strictly liable under Massachusetts Lead Law.
The final exception is for injury within ninety days from the date the insured took title to the property if the injury is a result of exposure to lead in or on that property. The insured must comply with the requirements of the Massachusetts Lead Law that applies to new owners in order for the exception to apply.
Lastly, the insured is required to notify the carrier or the agent as soon as practicable if they receive a Letter of Interim Control or Compliance, or the equivalent. The insured must also provide a copy of the letter to the carrier on request.
Coverage for Lead Poisoning – Massachusetts, DL 24 42
Along with the exclusion for lead liability is an endorsement for coverage for lead poisoning, the insured is able to schedule a specific coverage amount at a specific location or locations.
DEFINITIONS
With respect only to the provisions of this endorsement, Definitions Paragraph B.2. “bodily injury” in Personal Liability form DL 24 01 attached to this policy is replaced by the following:
2.”Bodily injury” means bodily harm, sickness or disease arising out of lead poisoning, including required care, loss of services and death that results.
We cover damages caused by “bodily injury” at the location(s) listed below, including common areas used in connection with such location(s), only if such “bodily injury” is caused by the presence or exposure of lead in or on any of the location(s) listed below, including common areas used in connection with such location(s).
The coverage provided by this endorsement does not apply to “bodily injury” resulting from an “insured's” gross or willful negligence.
Our total liability for all damages for lead poisoning resulting from any one “occurrence” will not be more than the Coverage L Lead Poisoning Liability Limit stated above.
Under Coverage L . Personal Liability Exclusion F.7. is deleted to the extent of the Lead Poisoning Liability Limit stated above and with respect to the location(s) listed above.
All other provisions of this policy apply.
Analysis
The exclusion defines “bodily injury” as harm, sickness, or disease that results from lead poisoning and the care required to treat such injury. The injury must result from the scheduled property including common areas used with that property due to the presence or exposure of lead. As in the earlier exclusion, gross or willful negligence is excluded. The maximum coverage amount is the limit listed in the schedule.
Maryland Coverage for Lead Liability, DL 24 52
Similar to Massachusetts, Maryland requires the insured to schedule the property that is to receive coverage for lead liability. Maryland takes lead exposure very seriously, and the endorsement is built around state statutes regulating lead exposure in residential property.
A.Definitions
With respect only to the provisions of this endorsement, Definitions B.12. through 17. are added:
12.”Affected property” means:
a.A residential rental property constructed before 1950 that contains not more than one “rental dwelling unit”; or
b.A residential rental property that contains not more than one “rental dwelling unit” for which the owner makes an election under Section 6-803(a)(2) of the Maryland Environment Article; or
c.An individual “rental dwelling unit” within:
(1)A residential rental property constructed before 1950 that contains more than one “rental dwelling unit”; or
(2)A residential rental property that contains more than one “rental dwelling unit” for which the owner makes an election under Section 6-803(a)(2) of the Maryland Environment Article.
However, “affected property” does not include property exempted under Section 6-803(b) of the Maryland Environment Article.
13.”Elevated blood lead” means a quantity of lead in whole venous blood of any “person at risk” that equals:
a.25 or more micrograms per deciliter, as first documented by a test performed on or after October 1, 1994 through September 30, 1999; and
b.20 or more micrograms per deciliter, as first documented by a test performed on or after October 1, 1999.
14.”Person at risk” means a:
a.Person under six years of age; or
b.Pregnant woman;
who is not an “insured”, who resides or regularly spends at least 24 hours per week in an “affected property” described above.
15.”Relocation expenses” means all expenses necessitated by the relocation of your tenant's household to a lead-safe housing of comparable size and quality, including:
a.Moving and hauling expenses;
b.The HEPA-vacuuming of all upholstered furniture, owned by your tenant, which was located at the existing “affected property”;
c.Payment of a security deposit for the leadsafe housing to which the tenant is relocated; and
d.Installation and connection of utilities and appliances.
The following additional expenses are included if the relocation is only temporary:
a.Meal expenses if the temporary lead-safe housing, to which the tenant is relocated, does not contain meal preparation facilities; and
b.The cost of storing furniture or other personal belongings.
16.”Rent subsidy” means the difference between the rent paid for the existing “affected property” in which the “person at risk” resides at the time the qualified offer is made, and the rent due for the lead-safe housing to which the tenant is relocated, for the period of relocation. This amount shall be no more than 150% of the existing rent each month and applies until the “person at risk” with “elevated blood lead” reaches six years of age or, in the case of a pregnant woman, the child born as a result of such pregnancy reaches six years of age.
17.”Rental dwelling unit” means a room or group of rooms that form a single independent habitable rental unit for permanent occupation by one or more individuals that has living facilities with permanent provisions for living, sleeping, eating, cooking and sanitation.
A “rental dwelling unit” does not include:
a.An area not used for living, sleeping, eating, cooking or sanitation, such as an unfinished basement;
b.An area which is secured and inaccessible to occupants;
c.A common area which is not part of, or adjoining, a rental dwelling unit within a multifamily rental dwelling;
d.A unit which is not offered for rent; or
e.A unit within a hotel, motel or similar seasonal or transient facility.
Analysis
The form defines “affected property” as rental property constructed before 1950 that contains not more than one rental unit or not more than one for which an insured makes an election under the Maryland Environment Article subtitle, which has the purpose of reducing childhood lead poisoning while maintaining affordable rental housing. A rental dwelling unit constructed before 1950 that contains more than one rental unit or a property with more than one rental dwelling unit for which the insured makes an election under the statute is also considered affected property. However, the definition does not apply to property exempted under Section 6-803(b) of the Maryland Environment Article. Such property is not affected property or property in which the owner elects to comply with the statute, or property subject to property owned or operated by federal, state, or local government regulations that are stricter than those in this subtitle.
“Elevated blood lead” is defined so there is no question that the person has been exposed to dangerous levels of lead. There are two different levels in use: one between 1994 and 1999 and one after 1999. The elevated blood level must be in a “person at risk,” and a “person at risk” is someone under six years of age, a pregnant woman, or someone who is not an insured who resides or is regularly at the affected property for at least twenty-four hours per week. In order for lead exposure to be a serious hazard, exposure must be consistent over a period of time; someone exposed at less than twenty-four hours a week is not thought to be exposed sufficiently to suffer adverse effects.
Because lead exposure is so serious, relocation expenses are almost a given. “Relocation expenses” include all expenses brought on by the need to relocate the tenant's household to lead-safe housing of comparable size and quality. This includes moving and hauling expenses, HEPA-vacuuming of all upholstered furniture owned by the tenant that was at the affected property, payment of a security deposit at the lead-safe housing, and installation and connection of utilities and appliances. If the relocation is temporary, then meal expenses are covered if the new location does not have preparation facilities, and the cost of storing furniture and other belongings is included as well.
A “rent subsidy” is defined as the difference between the rent at the affected property and the rent at the lead-safe housing to which the tenant has been relocated. The amount allowed is no more than 150 percent of the existing rent each month and lasts until the at risk person with an elevated blood level reaches age six, or the child born to a pregnant woman reaches age six.
The last definition is “rental dwelling unit,” which is a room or group of rooms forming a single independent habitable rental unit for permanent occupation by one or more people. The unit has living facilities with permanent provisions for living, sleeping, eating, cooking, and sanitation. This would be a standalone home rented to others, for example. Not included in a rental dwelling unit are areas not used for living, sleeping, eating, cooking, or sanitation, such as an unfinished basement, areas that are secured and inaccessible to residents, perhaps an attic, common areas not part of or adjoining a rental dwelling unit, units not offered for rent, or units within a hotel, motel, or similar seasonal or transient facility. If the tenants have no access to part of the property, or common areas are not used for living areas, lead exposure is not an issue. With hotels, motels, and other transient facilities, the exposure to lead is generally for a short period of time and is not a great hazard.
B.Coverage
1.If an “insured”, or an agent designated by an “insured”:
a.Registers the “affected property” described above with the Department of the Environment; and
(1)Such “affected property” passes the test for lead-contaminated dust as set forth in Section 6-816 of the Maryland Environment Article; or
(2)Performs the lead hazard reduction treatments and the “affected property” complies with the risk reduction standard as set forth in Section 6-815(a)(2) of the Maryland Environment Article; and
b.Obtains, and provides us with a copy of, a verified report from a lead paint inspector accredited by the Department of the Environment, certifying that the “affected property” described above is in compliance with the provisions of Section 6-816 or 6- 815(a)(2) of the Maryland Environment Article; we will pay the expenses of a qualified offer that is made pursuant to Title 6, Subtitle 8 of the Maryland Environment Article. We will make all payments to the provider of services, except that incidental expenses may be paid to the “person at risk” with “elevated blood lead”, or to the child's parent or legal guardian.
2.For the purposes of Paragraph B.1. above, the expenses of a qualified offer include the following:
a.Up to $7,500 per “person at risk” with “elevated blood lead”, for the reasonable expenses for the medically necessary treatment to mitigate the effects of such “elevated blood lead” to that “person at risk”, but only to the extent that the cost for such treatment is not payable by the Maryland Medical Assistance Program or a health insurance plan covering the “person at risk”; and
b.Up to $9,500 per “person at risk” with “elevated blood lead”, for the “relocation expenses”, “rent subsidy” and incidental expenses, such as transportation and childcare expenses, which may be incurred by the household of the “person at risk”.
3.The coverage for the expenses described in Paragraphs B.1. and B.2. above does not apply to an “affected property” for which:
a.An “insured” willfully and knowingly falsifies information in order to receive certification of compliance with Title 6, Subtitle 8 of the Maryland Environment Article; or
b.An “insured” falsely certifies, as part of the qualified offer, that an “affected property” complies with the registration or risk reduction standards as required under Title 6, Subtitle 8 of the Maryland Environment Article.
Analysis
Coverage is provided under very specific circumstances. The insured or his agent must register the property with the Department of the Environment, the property must pass the test for lead-contaminated dust as set forth in statute, perform the lead hazard reduction treatments so that the property complies with the standards set forth in statute, and obtain a copy of a verified report from a lead paint inspector accredited by the Department of the Environment certifying that the property is in compliance with statute. Once this has been completed, the carrier will pay the expenses of a qualified offer made pursuant to statute. All payments will be made to the service provider other than those to be paid to the person at risk or the child's parents or legal guardians.
A qualified offer includes up to $7,500 per person at risk with an elevated lead level for the reasonable expenses for medically necessary treat to mitigate the effects of lead exposure but only if the costs are not paid under Maryland Medical Assistance or another health insurance plan covering the affected person. So this coverage is excess over any available medical insurance. Also provided is up to $9,500 for relocation expenses, rent subsidy, and incidental expenses such as transportation and childcare due to the lead exposure. However, if the insured falsifies information in order to receive certification or falsely certifies as part of the qualified offer that the residence is in compliance with the risk reduction standards when it is not, there is no coverage. As with any policy, misrepresentation is fraudulent behavior, and no policy covers such activity.
C.Conditions
Paragraph L. Cancellation And Nonrenewal is added only with respect to the coverage provided by this endorsement.
L.Cancellation And Nonrenewal
We may, with respect to an “affected property” described above, which has been certified to be in compliance with the provisions of Title 6, Subtitle 8 of the Maryland Environment Article, cancel or nonrenew this endorsement for one or more of the following reasons:
1.You fail to:
a.Pay the applicable premium when due;
b.Perform lead hazard reduction treatment at an “affected property” for which coverage is being canceled under this Paragraph 1.b.;
c.Allow us, or our designee, reasonable access to an “affected property” for the purpose of inspecting for the presence of or exposure to lead; or
d.Adhere to the terms and conditions of this policy with respect to this coverage;
or
2.Either such “affected property” fails to comply with, or you fail to maintain its compliance with, the lead hazard reduction treatment standards required under Title 6, Subtitle 8 of the Maryland Environment Article.
However, we will automatically reinstate the coverage if you provide us with a new verified report from a lead paint inspector accredited by the Department of the Environment which states that the violation, cited in either L.1.b. or L.2. above, which caused the cancellation or nonrenewal has been corrected within 30 days after we mailed a notice of cancellation or nonrenewal of coverage to you. Proof of mailing will be sufficient proof of notice.
The notice shall be mailed to you at your last address known to us by certificate of mail, at least:
a.10 days before the date cancellation takes effect if we cancel for nonpayment
of premium; or
b.45 days before the date cancellation takes effect if we cancel for any other permissible reason.
Within 45 days of issuing a notice of cancellation, we will provide a copy of such notice to the Maryland Department of the Environment, including the results of any inspection of an “affected property” for which coverage is being canceled, if cancellation is based on the results of that inspection.
All other provisions of this policy apply.
Analysis
The final section adds specific cancellation and nonrenewal procedures that apply to the endorsement coverage only; the standard conditions apply to the rest of the property. Cancellation or nonrenewal is allowed when the insured fails to pay premium due, fails to perform lead hazard reduction treatment, fails to allow the carrier or its designee reasonable access to the property for inspection for the presence of lead, or fails to adhere to the terms and conditions of the coverage. Also failure of the property to comply with, or the insured's failure to maintain compliance with the lead hazard reduction treatment standards requirement required in statue is reason for cancellation or nonrenewal. The insurer does not want to provide coverage if the insured is not managing and controlling potential lead exposures. The coverage may be reinstated if the insured provides the carrier with a new verified report from a lead inspector accredited by the Department of Environment. The statement must verify that the violation that caused the cancellation or nonrenewal has been corrected within thirty days of the mailing of the notice of the cancellation or nonrenewal. So, if the letter was mailed on the fifteenth of the month and the insured receives it on the nineteenth, he has thirty days from the fifteenth to make the corrections, not thirty days from the nineteenth. Standard notice requirements apply. Notices of cancellation must be mailed ten days before the date of cancellation when cancellation is for nonpayment, and forty-five days when cancellation is for any other reason. A copy of the cancellation is also provided to the Maryland Department of the Environment, including the results of any inspections if the cancellation is based on the results of that inspection.