Mould
Although mould is a constant presence in any indoor
environment, homeowners and tenants across the country
are paying more attention to any impact mould may have.
The extreme cases involve major renovations where mould
has weakened or damaged the structure of a home or
condominium. As a result, REALTOR® liability is a concern. In
addition, some insurance companies are taking steps to limit
coverage for mould damage.
However, scientific research on the relationship between
mould and health problems is inconclusive. Currently there
are no established standards for acceptable levels of indoor
mould. Despite the lack of standards, mould is the latest
environmental health issue generating public attention.
REALTORS® are potentially liable for failure to disclose an
environmental hazard.
As the issue of mould emerges in Canada, REALTORS® should
be as well informed as possible about the issues. The best
advice to a seller is to disclose any water problems or presence
of mould up front. The best advice to buyers is "beware."
In May 2002, the "Mould Advisory Group," a committee of
the Insurance Bureau of Canada, recommended that
insurers tighten up wording in their policies concerning
mould-related damage or injury. It noted that skyrocketing
claims in the United States, mainly involving water and flood
damages to residences, could spill into Canada.
The Insurance Board of Canada (IBC) then issued an
advisory to its member companies, recommending they
exclude mould completely from any policy.
There has not been an explosion of mould claims in Canada.
From 1995 to 2002, there were less than 30 mould lawsuits
in Canada, including two failed class actions.
Mould is viewed by insurers as an inevitable risk, and
something inevitable is not insurable. Mould is excluded
under the category of deterioration. Mould is not a new
phenomenon in the insurance industry. Some insurers are
offering mould coverage in separate environmental
insurance policies under the umbrella of indoor air quality.
According to the Ontario Real Estate Association (OREA), the
premiums for environmental insurance are quite high-about
$10,000 for $1 million of coverage-which is expensive for
residential property owners.
For additional information on this subject, please refer to the
CREA publication "Real Estate Guide to Mould".
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