Summary: Multi-million dollar claims and settlements alleging mold infestation have triggered other claims seeking damages. Insurers found dealing with mold claims difficult because of a lack of science establishing the toxicity of mold infestations. Insurers, not wishing to deal with mold claims either wrote detailed and unambiguous exclusions or agreed to cover the injury due to mold for a small limit of liability. The most effective change in the policies have been the specific coverage with a small limit of liability.

Mold became a concern for insurers after a trial in Texas that resulted in a major verdict against an insurer. The fear of mold claims was engendered in the insurance industry by the trial court decision in Ballard v. Fire Ins. Exchange, No. 99-05232 (Texas District Court, Travis County, June 1, 2001), cited in "Jury Awards: $32 Million to Texas Homeowner in Mold Coverage Action," 6, No. 12, Mealey's Emerging Insurance Disputes 11 (June 20, 2001) and "What Coverage Attorneys Need to Know About Mold," Tort and Insurance Practice Law Journal, (Fall 2002 (38:1), at page 45).

In fact, the fear of being painted with the Ballard brush was mostly misplaced. The verdict was the result of poor claims handling, not mold. Almost the entire $32 million verdict was punitive damages that did not withstand appellate review and resulted from an admission by the adjuster that she lied to the insured.