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A report recently released by the GREENGUARD Environmental Institute, a non-profit organization that provides mold risk reduction certifications, ranks states for mold contamination on commercial and residential properties. The ranking of states, although based on property insurance claims, is similar to the list of states with high numbers of mold-related professional liability claims.
Ranking Property Insurance Claims
The rankings are part of an effort to stimulate use of GREENGUARD’s certification program for good property development and management practices. States are ranked using a “relative hazard ranking model” developed by American Risk Management Resources. It is based on a comparison of mold-related losses on property insurance claims with the total premiums paid for such coverage.
The ten states with the highest prevalence of claims according to the “premiums in/payments out” ranking are: Texas, Florida, Oklahoma, South Carolina, Nevada, Arizona, California, South Dakota, Tennessee, and Kansas.
The rankings do not reflect the losses caused by the hurricanes in 2005.
Tracking Professional Liability Claims
Professional liability claims are ranked by frequency (the number of design liability claims related to the cause of loss) and severity (the total amount of insurance company money used to satisfy claims). The frequency measurement may be the most important to firms since any claim forces a policyholder to commit time and financial resources to its defense. Severity affects insurance rates as it reflects all defense expenses and payments made because of a settlement or adjudicated responsibility.
Schinnerer’s tracking of mold-related professional liability claims identified the same top ten states as those that are found in the GREENGUARD ranking. Ordered by frequency of claims they are: California, Texas, Florida, Arizona, Nevada, Oklahoma, Tennessee, South Carolina, Kansas, and South Dakota. The same states have the greatest indemnity payments for mold-related claims. South Carolina, however, moves up to fifth on the list of total severity.
Looking Behind Claims
According to the GREENGUARD Environmental Institute, the major factors contributing to mold contamination of commercial and residential real estate are the use of inferior building materials and poor construction techniques. Construction defects, improperly specified materials, and the failure to recognize deficiencies during construction are the source of many design liability claims.
High on each list are states with dry climates. While counterintuitive to the assumption that states with high humidity levels have higher damage from mold, moisture within buildings in high-temperature states with low outdoor humidity tends to condense within structures, creating a nurturing environment for the growth of mold and the growth of mold-related claims.
Schinnerer Mold Resources
Policyholders can access:
While clients increasingly attempt to establish baseline mold measurements, a standard for the conduct of mold assessments has been lacking up until now. The American Society for Testing and Materials (ASTM) has released a new standard intended to establish a shared understanding of the conduct and results of mold assessments. ASTM’s International Committee on Environmental Assessment, Risk Management and Corrective Action recently announced the development of ASTM E 2418-06, “Guide for Readily Observable Mold and Conditions Conducive to Mold in Commercial Buildings: Baseline Survey Protocol.”
The purpose of the protocol is to standardize the conduct of a mold assessment prepared for the transfer of commercial property. The presence or prospect of mold creates a level of concern—and often misperceptions—that can have a negative impact on the real estate market. ASTM’s standard recognizes that the goal of an assessment is an appropriate inquiry rather than an exhaustive assessment of the property. There is a four-part approach to be followed by consultants with the requisite qualifications to analyze mold-related issues: a documentation review, an interview, a walk-through, and the preparation of a report.
ASTM E 2418-06 can be purchased from the ASTM website, www.astm.org, for $40. The 15-page standard can be downloaded as a PDF or ordered for mail delivery.
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