The fear of mold claims was engendered in the insurance industry by the trial court decision in Ballard v. Fire Insurance Exchange (Texas District Court, Travis County, June 1, 2001). The decision encouraged a flood of “toxic mold” cases in Texas and across the United States.
The case began in 1990 when Ms. Ballard bought a large house in Dripping Springs, Texas, for $275,000 at a foreclosure sale. The main house was approximately 7,400 square feet and had serious physical problems. She began insuring the house with FIE, a member insurer of the Farmers Insurance Group, for $313,000 on the house and $187,800 for the contents. Ballard made multiple claims for water leaks and damages caused by ineffective plumbing.
Ballard obtained, by her pre-litigation claims, new sub-floors, custom-made hardwood flooring, and paint and plaster repairs. As the plumbing failed in different parts of her mini-mansion, Ballard was able to use the insurance claim money (all legitimately obtained) to remodel her house. As a person who was knowledgeable about insurance, she was able to save money on premiums by buying insurance for less than the replacement value of her house and still recover the full amount of her partial losses.
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