Lenders Still Face Threat From Mold Claims.

Hartford, CT -- In the last three years, the insurance industry has moved quickly to protect itself from mold damage claims by adding "mold exclusions" to policies for residential and commercial real estate.

And one environmental consultant thinks lenders should do the same.

The mold exclusions were prompted by high-profile lawsuits where insurance companies were ordered to pay multimillion-dollar sums to tenants and homeowners.

"Mold contamination is certainly not as catastrophic as a terrorist attack, but the reaction from the insurance industry was similar, which underlines how serious the mold issue has become," said Charles Perry, principal of Environmental Assurance Group, in a recent news release.

"Insurers anticipated the rising wave of mold cases across the country, and they exited the scene. What I find amazing is that the other parties bound to be affected by the financial fallout of moldy properties - lenders, developers and rating agencies - have not taken the hint from insurers and moved equally fast to reduce their risks."

Mr. Perry also told MSN that insurance actuaries are "pretty smart people." If they don't want to cover mold risk, mortgage lenders should wonder whether they want to be left holding the bag.

Without insurance industry coverage for the fallout from mold, lenders and builders are now looking for new prevention techniques, including mold-specific inspection protocols, new ...