HO3/Prior Claim/Mold issue questions

[chadsherk]

Hi there. I am looking for some general advice relative to a customer before I engage claims rep. I'll try to be as brief as possible but there's a little bit to this. This property is located in TN.

Customer has had some past water claims between 5-10 yrs old. Claims originated from water leaks in guest bathroom and master bathroom (separate legit claims, different times). Each time, carrier dried out the water damage, removed some drywall, and replaced to get the bathrooms working again. Typical water claims, right?

Well, customer's wife has been having some pretty major health issues within the last couple of years. After seeing several doctors and not getting any answers, they ran a test that measures mold toxicity in the blood. It turns out that she has high levels of mold in her bloodstream and that is the likely culprit of her health issues.

These customers are also friends of mine, and I have been to their house many times. They keep a nice house and there is certainly no visible indication of mold. They hired an independent mold inspector who did an exhaustive inspection on the house. Turns out that there are concentrations of toxic mold centered around samples taken from the areas that were previously remediated and repaired from previous claims. Sample data is very thorough and explicit in the findings that the problem areas likely are the subfloor and underlying floor joists under the prior problem areas. To completely fix this issue, the inspector believes that these bathrooms are going to have to be demo'd, problem areas are going to have to be disposed of (not treated) and replaced, and the bathrooms redone.

Customer has replacement cost HO3 policy and still has the same carrier they've had throughout these prior claims. They have basically $10k per occurrence in mold property coverage and $50k mold coverage coming out of coverage E (liabilty), which i don't believe helps much in this case.

Here are my questions, and I know all states vary, and all policies differ, but I'm just reaching out to see what info or advice I can get on how to help before I engage an adjuster and ding their claims history.

1. In your experience, do you believe the $10k mold coverage is their only recourse here? I personally believe that since there's correlation between mold inspection results and the location of the prior claims, there's got to be some way for the company to go back and make things right.

2. How far back have you ever seen a carrier go to reopen old claims? Or in your experience, would it trigger a new claim? What is the basis of a new claim without a loss?

3. Simply put, if it were you and you were trying to help your customer, what do you do?

I'm glad to answer any questions you may have but I'd rather keep the carrier name private.

Many thanks in advance!

 

[Al3x Lee]

Hi Chad,

Definitely a tough one here. I'm not a claims expert, but I would assume after 5-10 years, they have probably passed a statute of limitations. You would have to research the laws in TN further to verify this.

Additionally, even if you could get this reopened, there would likely be an investigation to see if the fault was with the insurance company or the contractor they hired. Then you get tied up with the possibility of the contractor being at fault and if their retroactive date is still valid from that date range. There's a rabbit hole of possibilities in these kinds of situations.

Simply put, if it were you and you were trying to help your customer, what do you do?

I would advise staying out of this one, regardless of if they're your friends. You're likely going to create a larger mess by giving them advice that's beyond the scope of your knowledge.

If they were my friends, I would tell them to consult an attorney specializing in these kinds of claims.

 

[AZDave]

3. Simply put, if it were you and you were trying to help your customer, what do you do?

I would turn the claim in with a recent loss date of when mold discovered, do not commit to anything, and leave it between your insured and adjuster.

Mold is a four letter word....

 

[adjusterjack]

Here are my questions, and I know all states vary, and all policies differ, but I'm just reaching out to see what info or advice I can get on how to help before I engage an adjuster and ding their claims history.

I am a retired property claims adjuster.

Neither the adjuster nor his employer had any obligation to monitor repairs. The adjuster paid based on visible damage. If there was any mold at the time the repairs were done, it was up to the homeowner to report it while the mold was exposed. It would have been easy for the adjuster to write a supplement based on the mold coverage.

If no mold was reported at the time of the repairs, it suggests that either the homeowner or the contractor, or both, overlooked it, or ignored it, or there was no visible mold at the time.

If the homeowners was to allege negligence on the part of the contractor after 5 to 10 years, well, good luck with that. I doubt that they would be successful but they can consult an attorney.

How far back have you ever seen a carrier go to reopen old claims?

As for re-opening 5 to 10 year old claims, no. It's just not going to happen. And if the insured alleged breach of contract on the part of the insurer, Tennessee's 6 year statute of limitations for breach of contract would not apply because the standard HO-3 says, in regards to Section 1 - Property:

"Suit Against Us: No action can be brought against us unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the date of loss."

I would turn the claim in with a recent loss date of when mold discovered,

Agree. No guarantees but hope springs eternal.

I would advise staying out of this one, regardless of if they're your friends. You're likely going to create a larger mess by giving them advice that's beyond the scope of your knowledge.

Amen to that.

I lost count of how many time I had to tell an agent to butt out.

 

[NY independent]

If you want to go above and beyond for them, you can put them in touch with a really good public adjuster for advice. He/she will concur with the above but at least you had a claim specialist outside of the carrier advising them.

 

[fed up]

Insurance claims rarely, if ever, open up walls or remove flooring looking for mold. A 10 year lookback will not happen since there is no way to prove or disprove a more recent occurrence. Do not hire a public adjuster!

 

[NY independent]

I didn't say hire...I said consult with.....

 

[MichaelRS]

Share it with a public adjuster you trust. They'll decide if they can make money, and if so, will battle it out with the carrier. Some things are sort of outside your control, so introduce your clients to others who may be able to assist them better. Remember, claims are between the client and their carrier. From a technical perspective, an agent is not to be involved. What you wrote is memorialized, and aside from maybe saving something that is going sideways, you've done your job if their coverage is correct.

 

[adjusterjack]

NEVER hire a public adjuster. Think about it. Let's say it costs you $10,000 to fix your house. The public adjuster charges you 15% and you have a $500 deductible. You're left with $8000 to fix $10,000 worth of damage. Would you hire a public adjuster if you knew that ahead of time? Of course not. So, how does the public adjuster get you to hire him? He promises to get enough money from the insurance company to cover his commission and the deductible leaving you with $10,000. How does he do that? He inflates the damage estimate to $12,000. What's that called? INSURANCE FRAUD. You might think you don't care about that but, trust me, that kind of rip-off is reflected in your insurance rates.

And if he doesn't get the promised amount (many don't) he still gets 15% of your settlement because you signed a contract allowing the public adjuster to get the check and take his fee out before sending you the rest.

 

[Jhaaz]

I am a real estate appraiser. It is illegal for me to charge a fee based on the value of the property so we just charge a flat fee. I don't understand how it is legal for a public adjuster to charge a % of the claim in which they determine the value of the claim. That is messed up.

Mold is an issue in the area I service as an appraiser. Some observations I have noted over the last 25 years. 1. Never buy a property that is or has been infested with mold. 2. Just because it was treated and removed does not stop it from popping up in the future. 3. If you get mold again it is a seperated occurrence not a continuation of a prior treatment. 4. Mold is worse than termites because it can grow/eat through just about anything. 5. People try to fix mold problems themselves instead of hiring a professional which means the mold wasn't killed first before they removed the materials which causes spores the fly everywhere to start new colonies. 6. Mold spores can make pets and people sick and even kill them. 7. Don't try figure out when the mold started(it could be even years) because by time you discover the mold it is too late. 8. The discovered date is what insurance use as a occurance date. 9. Mold is a ninja or stealth killer.

My 2 cents.