Understanding the Spike in Mold Claims
The use of EIL policies is no longer limited to hazardous material manufacturers or facilities. The need for EIL policies should be applied to commercial buildings and managers more than ever. The frequency of mold-related losses in commercial buildings occurs more than we might think.
Environmental policies are more important than ever
From mold to Legionella bacteria outbreaks, environmental- and pollution-related losses on commercial properties are on the rise, and these types of claims will only increase in the wake of Hurricanes Harvey and Irma. As a result, closer attention is being paid to pollution exclusions on property and liability policies.
This reality is changing the game as far as which coverage forms respond to losses and how claims are approached. For example, water grossly contaminated with bacteria is now handled as an environmental claim instead of being covered as a water loss under property policies. Mold losses that once fell under property policies as water losses are now either excluded or subject to significant sub-limits. More publicly known, Legionella claims are triggering pollution exclusions found in general liability and property policies.
As risk managers witness the change in how claims professionals read and apply pollution exclusions, insurance professionals have a great opportunity to offer environmental liability products to their commercial-property clients—and to protect themselves from errors and omissions claims.
For hospitality and high-rise condominiums—the traditional buyers of environmental impairment liability (EIL) policies—claims related to mold outnumbered all other claims even before Hurricanes Harvey and Irma. However, we have found that fewer than one percent of commercial building owners purchase EIL coverage. This means 99 percent of commercial buildings are underinsured for claims associated with contamination, including mold.
…..The use of EIL policies is no longer limited to hazardous material manufacturers or facilities. The need for EIL policies should be applied to commercial buildings and managers more than ever. The frequency of mold-related losses in commercial buildings occurs more than we might think.