Preventing and Responding to Mold Contamination

Get your WIMP ready if you hope to qualify for the environmental insurance that includes coverage for mold.

• By Steve Silicato, REM, CIE
• Oct 01, 2006

WITH the proliferation of lawsuits stemming from mold contamination, securing adequate insurance coverage for these types of claims can be a real challenge. As a result, the insurance manager is not always able to determine all of the risk management controls necessary to procure insurance coverage for this issue. The solution for this situation is often very complex, and much of it will fall directly in the lap of today's occupational health, safety, and environmental (OHSE) professional.

This area of risk management has various definitions, including "decisions made to reduce a company's vulnerabilities by either mitigating the risks or applying cost-effective controls." The overall environmental risk management process includes environmental insurance, but obtaining insurance coverage may not be possible without a comprehensive mold prevention and response program. These plans are often referred to by the amusing acronym WIMP (Water Intrusion Management Plan). Without having a quality WIMP for preventing water damage and responding to it once it has been has been identified, a company most often will not qualify for the environmental insurance that includes coverage for mold.

General liability and property insurance policies contain a variety of policy limitations and exclusions, including the pollution and contamination exclusions and newly added microbial matter (mold) exclusions. As a result, insureds are turning to the specialty pollution insurance market to procure the necessary coverage. Companies assist clients in this complex area, consulting on pre-construction practices to prevent water intrusion, developing adequate WIMPs, and obtaining the necessary insurance protection.

What type of company is exposed to potential mold claims? The list is long and includes general contractors, HVAC, plumbing and roofing contractors, residential and commercial builders, building owners, architects, engineers, and environmental consultants and remediation contractors. With so many entities at risk, simply identifying the possible persons at fault for the mold damage can be costly for any of these parties defending such claims. However, as with any loss, the best risk management practice is avoiding the very causes and elements that lead to such claims.

Tolerances Differ
Although mold has been a hot topic in the OHSE industry for many years, confusion still exists as to what constitutes mold. Molds are simple, microscopic fungi that grow on the surface and crevices of objects, such as wood, carpeting, and cellulose-based objects such as ceiling panels and drywall. More than 100,000 species of mold exist naturally in the environment, each at its own ambient level, depending on the locale.

Mold and people have co-existed for thousands of years without negative health effects. Only a small number of molds are suspected of having the potential to negatively affect human health if touched, inhaled, or ingested. Further, there is no exact science that can directly relate illnesses and symptoms to the presence of mold, although health experts agree mold should not be allowed to grow and should be remediated immediately upon identification.

In addition, there is no one rule on what is an acceptable level of mold. This is a result of varying levels of each individual's personal tolerance to the substance. As a rule of thumb, a measurement of mold spores from outside the building should be compared to a measurement of mold spores found inside. If the levels are the same, the level is permissible. If it is higher inside the building, this means there is a building envelope and/or mechanical system problem that is causing moisture incursion, and it must be addressed.

Complaints about mold contamination seem to have spiked around the 1980s, when construction techniques emphasized air-tight buildings that promoted energy efficiency. The problem with that is the buildings were not allowed to "breathe," which is necessary to keep moisture in buildings from reaching thelevel where mold may grow. In fact, the new discipline called "building science" has grown and evolved greatly in recent years, involving the analysis, development, and application of environmental control systems, construction methods, and building materials for creating a healthy and sustainable environment.

Mold growth requires a "three-legged stool" to grow. The first is a consistent temperate environment (lack of air flow, dark/damp conditions, and ambient temperatures above 65 degrees Fahrenheit). The second factor is a food source, which can consist of wood, paper, or other cellulose- or carbon-based material. Because these two factors are always present in construction and cannot be avoided, there is little that can be done to control them. The third and most important leg is moisture, which includes not only pooled or running and dripping water, but also high humidity (greater than 60 percent relative humidity). Usually if water intrusion is not addressed within a 48-hour window, mold can begin to grow.

'Here's the Plan'
This is where the OHSE professional plays an important role. Adequate moisture management begins with identification of the source of water intrusion, and then comes a quick and satisfactory response. Reputable mold remediation contractors brought in to handle the mold should have many years of experience behind them in the commercial building environment, not just residential experience.

Having experience solely in the residential arena is not enough because the factors that lead to a mold condition can be markedly different in these two arenas. In addition, contractors should demonstrate training and certification for competency in the guidelines and standards established by nationally recognized organizations. Of equal importance is that the contractor possess environmental liability insurance that "does not exclude" microbial matters.

What would a typical Water Intrusion Management Plan cover? The plan should include the program organization, preventive maintenance and inspection, moisture control basic response, and mold remediation should excessive moisture/water or mold occur. Each company should refer to applicable federal and state published programs, as well as available information when preparing the plan and implementing the program.

Here is a more detailed explanation of the basic mold prevention plan most environmental insurers will require to satisfy their underwriting requirements before they can even consider providing insurance coverage for mold:

• Background on mold. It should not be assumed that everyone within an organization understands what mold is, how it grows, what its causes are, and generally how it should be prevented. This information should serve as the introduction of the plan. Awareness training for management, as well as building maintenance/custodial staff, should be part of the plan.
• Program organization. It is important that management list and define exactly who will be assigned the responsibilities outlined in the mold plan. These responsibilities may include overall program oversight, incident reporting and follow-up, subcontractor oversight, inspections and documentation, and also a qualified remediation subcontractor for evaluation and/or remediation of the mold. The plan should indicate how and by whom information is communicated (i.e., distribution of program directives; periodic program monitoring and/or auditing; and communication and coordination of subcontractors). Staff should document water or mold conditions and what has been and will be done to prevent a recurrence. Management must clearly establish training goals and objectives for staff and subcontractors.
• Preventive maintenance and inspection. It is imperative to establish a preventive maintenance and inspection program that addresses water sources or inspects potential moisture problems. Also, it is essential to establish procedures to reduce potential moisture/water intrusions resulting from special events, such as facility shutdown, power outage, and severe weather.
• Moisture control basic response. Following guidelines indicated by the Institute of Inspection Cleaning and Restoration Certification S500 Standard and Reference Guide for Professional Water Damage Restoration, management should address topics that include discovery, corrective action, reinspection and closure, and documentation.
• Mold assessment and remediation. The work plan for mold remediation activities is usually established as prescribed by EPA's "Mold Remediation in Schools and Commercial Buildings" guidelines and the New York City Department of Health's "Guidelines on Assessment and Remediation of Fungi in Indoor Environments" when mold is observed or materials are wet more than 48 hours. The mold remediation procedure should address categorization of affected areas; selection of trained personnel and proper personal protective equipment; implementation of application of applicable guidelines; reinspection and closure; and documentation.

The New Asbestos? Not Likely
The question has sometimes been asked: Is mold the new asbestos? Yes and no. Yes, mold could be considered the "new asbestos" in terms of litigation and liability. While there is still much to learn about mold's impact on human health and to what extent remediation should take place, litigation about mold contamination continues to increase. As long as there is a question regarding how mold may affect human health, claims will continue to arise and lawsuits will continue to be filed.

No, mold will never become the "new asbestos" because, unlike asbestos--a manufactured substance that, once removed, never recurs--mold is a naturally occurring substance and may recur in areas from which it has been previously removed. Additionally, unlike asbestos, mold is not a manufactured product, and there are no huge manufacturers' balance sheets attributable to production and distribution. Without the "deep pockets" of industry to serve as a target for class-action lawsuits and supporting science to link potential illness to mold, there is less chance of multimillion-dollar verdicts and less interest in litigation.

Mold has been around forever and is here to stay. It must be monitored, mitigated, and prevented from growing in the first place. Water damage prevention and planned response are the keys to preventing mold. Because the general liability and property insurers are reluctant to provide coverage protection for mold, it makes sense for risk managers and the OHSE professional to seek guidance in securing a properly structured pollution liability policy to provide protection against mold claims.

This article appeared in the October 2006 issue of Occupational Health & Safety.

This article originally appeared in the October 2006 issue of Occupational Health & Safety.