No Coverage For Mold
Although winter storms may bring another round of mold claims, California appellate courts again have upheld the right of insurers to exclude coverage for damage caused by mold. De Bruyn v. Superior Court (Fire Ins. Exchg.) (2007) 07 C.D.O.S. 5019. The efficient proximate doctrine, which in California (unlike many states) constrains insurers in how they communicate what they want to cover and not cover, did not prevent the insurer in this case from excluding mold, even where the insurer agreed to cover water damage from sudden and accidental discharge of water from plumbing and household appliances.
In De Bruyn, the California appellate court (Second Appellate District [Los Angeles]) ruled that a water damage exclusion that excepted out coverage for sudden and accidental release of water, did not cover the resulting mold. That is because the exclusion “plainly and precisely” indicated that: “We never, under any circumstances, cover rust, mold, fungus, or wet or dry rot, even if resulting from exceptions . . .” In addition, the policy had a specific exclusion for rust, mold, fungus, or wet or dry rot.
The court held that Fire Insurance Exchange’s exclusion of coverage for mold did not violate Insurance Code § 530 or the efficient proximate cause doctrine in California. The efficient cause doctrine provides that if there is both a covered and non-covered cause of the loss for which the insured seeks coverage, there is coverage for the claim. Calif. Ins. Code § 530; Garvey v. State Farm Fire & Cas. Co. (1989) 48 Cal.3d 395, 403. In California, insurers are not permitted to “contract around” this rule. See, e.g., Howell v. State Farm Fire & Cas. Co. (1990) 218 Cal.App.3d 1446. In other states, courts recognize that an insurer can, if it does so clearly and explicitly, contract that despite the fact that one cause of the loss may be covered, if the other cause is not covered, there is no coverage. See, e.g., Arizona: Millar v. State Farm Fire & Cas. Co., 804 P.2d 822 (Ariz. Ct. App. 1991), review denied, 811 P.2d 1081 (Ariz. 1991); Utah: Alf v. State Farmer Fire & Cas. Co., 850 P.2d 1272 (Utah 1993).) See, also, the De Bruyn court’s footnote 3.
In De Bruyn, the California appellate court again confirms that an insurance company is permitted to provide coverage for some but not all manifestations of a loss, as long as the company does so in manner that communicates the information and does not violate public policy. Accord, Julian v. Hartford Und. Ins. Co. (2005) 35 Cal.4th 747 (insurer can exclude coverage for certain perils, i.e., weather conditions and landslides, even if the policy provides that it will cover the results of other weather conditions; the policy clearly communicated that the insurer intended to exclude coverage for rain that induced a landslide).
In De Bruyn, the California appellate court (Second Appellate District [Los Angeles]) ruled that a water damage exclusion that excepted out coverage for sudden and accidental release of water, did not cover the resulting mold. That is because the exclusion “plainly and precisely” indicated that: “We never, under any circumstances, cover rust, mold, fungus, or wet or dry rot, even if resulting from exceptions . . .” In addition, the policy had a specific exclusion for rust, mold, fungus, or wet or dry rot.
The court held that Fire Insurance Exchange’s exclusion of coverage for mold did not violate Insurance Code § 530 or the efficient proximate cause doctrine in California. The efficient cause doctrine provides that if there is both a covered and non-covered cause of the loss for which the insured seeks coverage, there is coverage for the claim. Calif. Ins. Code § 530; Garvey v. State Farm Fire & Cas. Co. (1989) 48 Cal.3d 395, 403. In California, insurers are not permitted to “contract around” this rule. See, e.g., Howell v. State Farm Fire & Cas. Co. (1990) 218 Cal.App.3d 1446. In other states, courts recognize that an insurer can, if it does so clearly and explicitly, contract that despite the fact that one cause of the loss may be covered, if the other cause is not covered, there is no coverage. See, e.g., Arizona: Millar v. State Farm Fire & Cas. Co., 804 P.2d 822 (Ariz. Ct. App. 1991), review denied, 811 P.2d 1081 (Ariz. 1991); Utah: Alf v. State Farmer Fire & Cas. Co., 850 P.2d 1272 (Utah 1993).) See, also, the De Bruyn court’s footnote 3.
In De Bruyn, the California appellate court again confirms that an insurance company is permitted to provide coverage for some but not all manifestations of a loss, as long as the company does so in manner that communicates the information and does not violate public policy. Accord, Julian v. Hartford Und. Ins. Co. (2005) 35 Cal.4th 747 (insurer can exclude coverage for certain perils, i.e., weather conditions and landslides, even if the policy provides that it will cover the results of other weather conditions; the policy clearly communicated that the insurer intended to exclude coverage for rain that induced a landslide).
