Water Loss/Mold Protocol

Overview
Despite the fact that mold has been around for thousands of years, it has only recently become the focal point of increased claims and litigation. The media has sensationalized the issue and the plaintiff bar association has shown a keen interest in pursuing mold claims. Carriers are likewise responding by eliminating or severely restricting coverage. The net result is that property owners face an increased exposure to a risk that was relatively insignificant in the past. Should a tenant file a lawsuit, defense costs alone can cost owners tens of thousands of dollars. Prevention and mitigation are critical activities for every property owner.

It is important to note that of the water losses that result in mold claims and companion litigation, a common denominator has been the failure of either the property owner/manager and/or the insurance carrier to respond promptly and adequately. There are three key elements to a responsible mold protocol that must be addressed.

• Awareness
• Identification
• Response

Issues & Actions
The successful prevention of mold contamination due to a water loss is dependant on several factors and is influenced by several constituencies. A “system” must be in place that encompasses the following key actions:

• Prompt recognition that a water leak has occurred, preferably immediately but definitely within 24-hours of the occurrence. In the majority of situations, it will be a tenant who notices the leak. Tenants need to be educated on the importance of prompt notice to the building owner /manager when a leak occurs. Consideration should be given to providing information bulletins to the tenant at the time of lease signing, periodic informational mailings, annual mail surveys, posting bulletins in common areas, and incorporating language in the lease agreement to reinforce this responsibility.
  
• Education of maintenance personnel on the same issues listed above for tenants. Develop an “attitude” of prevention not simply repair. Anytime a maintenance worker responds to a complaint of water intrusion, he/she must be aware of what to look for and what level of response is needed. Consider requiring an incident report for all water losses.
  
• Immediate reporting to Distinguished to avoid coverage disclaimer for late notice. Anything other than the nuisance leak that is quickly repaired must be reported. Failure to do so may result in denial of coverage. Time is of the essence in water losses. Immediate reporting will allow the carrier to respond quickly by inspecting and choreographing an appropriate response.
  
• Immediate identification and elimination of the source of the leak. Failure to do so is another common element of litigation. When a single source of water intrusion is not readily apparent, multiple sources should be considered and investigated. This is particularly important when a tenant makes complaints of dampness or musty odors.
  
• Removal and discarding of materials/items prone to mold germination due to their inability to dry (i.e., ceiling tiles, carpet padding). Many mold losses result from building materials or personal property that simply doesn’t dry properly.
  
• Complete drying and dehumidification of the affected areas including open and hidden (behind the walls and ceilings). Use wet vacs and/or fans. Depending on the nature and scope of the water loss, some destructive testing may need to be undertaken to insure mold isn’t breeding in ceilings or behind walls that have been affected.
  
• Utilization of appropriate cleaning/repair techniques as outlined here. In addition, cleaning with bacteria/mold preventing cleaning products should be SOP.
  
• Reinspection of the repaired area for evidence of mold 30-days post cleaning/repair. This pre-supposes whoever does the reinspection knows what to look for. In addition to conducting independent follow-up, cooperation of the tenant should be engaged, as they will know if any musty odors are present.

Preventative Steps

Conduct an annual inspection of every unit to identify any evidence of water intrusion. This may be done by building personnel if they have the proper training or an independent contractor with experience in mold detection and remediation. Be sure to look for:

• Water stains around window and doorframes, baseboards, ceilings.
• Musty odors emanating from carpeting or areas close to plumbing fixtures.
• Buckling floors or floor coverings.
• Accessible attic space should also be inspected as minor, chronic water intrusion may exist from flashings or other sources and can go undetected.

Getting Support

In order to gain the cooperation of all parties involved, it is important to address the WIIFM (what’s in it for me?) for each of the constituents. Here are some points for consideration and emphasis:

• The tenant is most immediately affected by a water loss and any residual mold growth, and should have a vested interest in helping building management resolve the problem. Their prompt reporting of incidents of water intrusion will eliminate or mitigate damage to their personal property, appearance of the residence, odor, inconvenience, or potential health problems. 
  
• Building managers can avoid unhappy tenants, repetitive maintenance calls, 'out of pocket' expenses, and exposure to litigation by responding promptly and properly to complaints of water intrusion.
  
• Building owners benefit by controlling and managing loss frequency and severity, which can impact rates; maintaining a positive image within the real estate community for having well maintained properties with satisfied tenants; and protecting him/herself from litigation caused by failure to respond to complaints of water intrusion. The latter is key as recent policy exclusions place owners in significant financial jeopardy for repairs, defense costs, and damages resulting from mold claims and litigation.

For more information, please contact:

Claims Department
The Distinguished Programs Group
6 East 43rd Street, 15th Floor
New York, NY 10017-4609
888-355-4626
212-297-3131 (fax)
dpgclaims@distinguished.com