INSURANCE WOES PLAGUE
APARTMENT LANDLORDS

The categories of potential liabilities for commercial real-estate owners, especially for apartment landlords are growing, as are the number of tenant claims for harm or injury.

These potential liabilities help increase insurance premiums for apartment landlords. Premiums increased an average of 60% to 70% in 2001 from a year earlier, and 50% to 100% for policies expiring at the end of 2002.

So far, landlords' increased costs for insurance haven't necessarily been passed on to tenants. That's because apartment landlords don't typically charge residents specifically for insurance expenses as an office owner would. You can raise tenants' rents to offset expenses, unless rent control cities prohibit and increase expenses, but for now, most landlords are more concerned about a softened rental market and filling empty units.

DEALING WITH THE MOLD

Perhaps nowhere is the growing liability problem more apparent than with mold. Last year, the number of mold claims was up threefold from 2000, with the problem particularly acute in California.

The fungal growth found in damp or wet conditions, has been linked to health problems. There are about 8,000 to 10,000 lawsuits pending nationwide for mold litigation. In December, about 500 tenants of an apartment complex in New York, who had alleged that mold exposure caused health problems, settled a suit against the building owner for a reported figure of as much as $1.8 million. Last November, a jury in Sacramento, California awarded a family living in an apartment complex $2.7 million for health problems allegedly caused by mold exposure. Insurers estimate they paid out $670 million last year for mold related property damage in Texas.

Mold had been excluded from policies except when it resulted from the accidental discharge or overflow of water, steam, or windstorm. But now, insurers are increasingly excluding mold from their policies altogether, regardless of the cause, and shifting the tab to landlords. More than thirty-five states allowed insurance companies to exclude mold from homeowner and commercial insurance claims. If insurers stop offering coverage on mold, apartment owners will either have to spend more to increase their mold mitigation programs, pay out a lot in litigation expenses and possibly settlements, or all of the above.

Insuring commercial real estate became more expensive last year for office building owners after September 11th. Insurance costs already were skyrocketing and the terrorist attacks just exacerbated matters. Many apartment owners argue they shouldn't have to buy terrorism insurance because apartments generally are considered low probability targets. A few lenders have been requiring that apartment owners obtain terrorism insurance.

Premiums in general rose before September 11th in part because of the dramatic increases in liability claims, as well as insurers' poorer investment returns. Some insurers, citing heavy losses, decided to exit the multifamily-insurance business, reducing the number of carriers. Less competition is allowing some insurers to raise rates.

Mold Matters, Inc. is capable of protection for landlords by giving basic information about indoor air quality problems, causes of respiratory illness or other symptoms such as neurological or psychological problems. Also air quality investigation methods, remediation, abatement procedures, such as mold cleanup, handling toxic mold contamination, and building repairs. Our total package service gives landlords peace of mind in the medical/legal arena.

Our investigations include on-site studies to investigate complaints of respiratory illness, asthma, allergies and other health issues that patients have after being diagnosed by their physicians, building owners to disclose mold reports to their tenants, residential owners involved in closing escrow, litigation situations with owners, and tenant disputes regarding evictions, etc.

For other air quality, mold, mildew, dampness or similar complaints, we may perform visual inspections, combined with possible culture swabs, bulk, surface, air samples, and case history to identify possible concerns. The purpose of air, culture swabs, and bulk sampling is to identify possible irritants, such as bio-aerosols, mold, mildew, pet dander, pollen, or other material that can cause respiratory distress or other complaints. In some cases where serious illness is a factor, there is reasonable cause to consult a physician for evaluation and possible treatment. We suggest that any building area that is suspicious of mold from water damage, pipe leakage, flood, any moisture intrusion should have samples taken by a qualified environmental facility to provide you with the most accurate diagnosis. Samples should be taken before any cleaning or removal begins. Diagnosis of the type of mold present is the best indicator of how to proceed with removal. Diagnosis should include not only genus, but also species of the organism.

We provide reports to genus (a taxonomic category such as homo is our genus and sapiens is our species, thus Homo sapiens, for human beings) and species with colored photomicrographs and human health effects. In some cases where allergies, asthma, or other respiratory problems are detected, they are utilized by physicians to assist in diagnosis and treatment of the patient. This kind of expert analysis will also aid building contractors with correct information to assist them in avoiding improper use of building materials that will encourage toxic mold growth.

Our staff of Medical Scientists' has worked closely with physicians in Clinical Laboratory Pathology for over thirty years in the Medical Mycology area. We have Ph.D's with degrees in Medical Mycology on staff for consultation.

Go to www.mold-matters.com for more information.