With the recent uptick in severity of natural disasters, businesses and property owners are becoming more and more concerned with what happens in the aftermath of such an event. My office is located here in the city of Houston and five months after Hurricane Harvey made landfall, the affected areas are still recovering.

According to the National Centers for Environmental Information, Hurricane Harvey is said to be the second most expensive hurricane ever to hit the United States with almost $125 billion in damage, the vast majority of which came from flooding. Once the clean up and rebuilding is done however, there is another concern that is still very real: mold from water intrusion that was not detected, as a result of a seal failing, or from the work of a contractor.

The sheer amount of rainfall (as much as 60 inches in some areas effected by Harvey) during a hurricane is cause enough for concern about water intrusion at the ground level, but what about elsewhere? As a business/property owner, the idea that moisture may not be detected until it develops into something more serious is all too real. Every seal that your building has, every seam, and cracks that you didn’t know existed are all potential entry points for water.

As a property owner, whether you lease your building to others or conduct your business at your owned location, dealing with a developing mold issue can be costly both from a business interruption stand point and from the remediation of the mold itself.

Directly after Harvey we saw a tremendous increase in the number of submissions for fire/water restoration contractors looking for insurance. This is typical after a natural disaster involving flooding or fire. The issue here is that almost every one of the submissions we received were from newly formed entities that had no experience in water restoration. Because of their lack of experience, most (if not all) of the A+ rated environmental insurance carriers were unwilling to offer coverage. So now there is a situation where there is a desperate need for water restoration services following an event that effected a large area, but there is a shortage of available established restoration companies and the only option is to use an entity that is newly formed, with little to no experience, and a good chance that they don’t have proper insurance. If the newly formed restoration contractor didn’t follow all the correct procedures to remove damage due to water intrusion on the property and mold is discovered, the property owner will probably be left taking the financial burden of the cost to remediate it. After all, if the restoration company’s insurance isn’t going to pay the lawsuit for damages since there was no coverage, what are the chances that this new entity has the money to actually take care of the mold problem? 

Another situation that might arise is if you had work done to your property prior to a hurricane or heavy rain event. There are a few different types of contractors whose work may be vulnerable to water intrusion. Some of these types of work may include electrical, HVAC, and glass repair/replacement. When working with a contractor, something you should always keep in mind is that just because the contractor has insurance doesn’t always mean they have the right coverage―the coverage in this case being Mold. So again, like the last example, you find yourself in a situation where your contractor is underinsured and even though a lawsuit is in the works, they may not have the kind of financial liquidity necessary to handle a mold claim.

What about the building itself? How old is the building? When was the last time all of the seals were inspected and repaired? When was the last time a building inspector was out and confirmed the health of the various seals? Old failing window seals, unnoticed cracks due to various issues such as shifting foundation, weak roofing from prior damage that was never detected or repaired. All of these scenarios have the potential to result in water intrusion. 

Mold is an exposure that every property owner has and if your insured owns property in an area that could potentially be affected by large rain or coastal storms, having the right Site Pollution coverage in place before an event like this could safeguard them from a significant financial burden. Contact Beacon Hill Associates to see what we can do to help protect your insureds.