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CNN Live At Daybreak

Insurance Claims and Lawsuits From People Made Ill by Household Mold

Aired April 23, 2002 - 06:20   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The insurance industry has been struggling with losses from September 11th and the stock market. Now another problem is spreading: insurance claims and lawsuits from people made ill by household mold.

Our Casey Wian has the story.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Victoria McMahon's house looks fine, but underneath the floor, behind the walls and on vents, mold is growing. Her doctors suspect, but can't prove, mold is behind her health problems, including blood clots in her lungs.

VICTORIA MCMAHON, HOMEOWNER: I run out of oxygen very quickly. I'm on a lot of medication right now. Six months ago, I couldn't walk out to my mailbox without feeling faint.

WIAN: McMahon is suing her homeowners insurance company, which says her policy doesn't cover damage from mold. Whether lurking behind walls or out in the open, some types of mold are known health hazards. Doctors estimate about 20 percent of people, especially those with allergies, are vulnerable.

While there's no evidence of a significant increase in the number of health problems linked to mold, the number of people seeking compensation is growing. Residents of this condominium complex claim water leaks from shoddy construction have spawned mold that's making them sick.

(on camera): Attorneys for developers estimate it will cost about $17 million to repair this complex. They're seeking $35 million in a lawsuit against the building's developer and contractors.

(voice-over): That would eclipse the $32 million won by a Texas homeowner last year. That case helped bring mold to the attention of homeowners and attorneys.

ALEX ROBERTSON, ATTORNEY: People that had these symptoms all of a sudden start looking around saying, "Maybe it's the chronic roof leak I've had and that black stuff that's growing that I can't wash off with Clorox. Maybe that is what's making my kid's asthma worse." WIAN: Most homeowner's insurance policies consider mold a maintenance issue and only cover mold damage when it's the result of a catastrophic event, such as flooding from a burst water pipe. The insurance industry blames the current rash of mold-related lawsuits on marketing by lawyers and mold remediation companies.

PETE MORAGA, INSURANCE INFORMATION NETWORK: It's obviously become an issue that attorneys are finding very lucrative in terms of lawsuits. And the lawsuits that we're seeing right now, with some of the lawsuits pending, are astronomical.

WIAN: In Texas, mold-related insurance claims jumped 500 percent last year, and homeowners' premiums are up 20 percent. Besides Texas, California, Florida and New York are all hotbeds. Mold claims have been filed in every U.S. state.

States are only now beginning to set standards for mold exposure, while insurance companies are revising policies to limit their exposure to mold-related lawsuits. In a few states, some carriers have even stopped writing homeowners policies because of mold.

Casey Wian, CNN Financial News, Santa Ana, California.

(END VIDEOTAPE)

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