Mould in properties is becoming a growing insurance issue

In November, a coroner ruled that Awaab died from a respiratory condition caused by mould in the one-bedroom flat he lived in, prompting Michael Gove, Secretary of State for Levelling Up, Housing and Communities to put social accommodation providers “on notice” and say it “must never be allowed to happen again” in a letter sent to every English council leader and social housing provider.

Health concerns

Sarah Woolnough, CEO at Asthma + Lung UK, says: “As a charity, we’re deeply saddened by this case. Exposure to mould and damp can be very harmful to our lungs, as mould releases spores that can be breathed in, causing symptoms like coughing, wheezing, sneezing or watery eyes.

“Mould and fungi are a major trigger for asthma attacks, and can worsen symptoms for those with other lung conditions, leaving them fighting for breath. Babies, small children, older people and people with allergies are more likely to be affected.”

Judging by the deafening silence from most insurers asked by Insurance Post to comment on the part the industry needs to play to preventing further deaths, mould claims is clearly a significant issue the industry is currently debating on how best to respond to. 

The few comments forthcoming from the insurance community ram home the message that mould only tends to be covered when triggered by an insurable event like a flood."

An Association of British Insurers spokesperson says: “Insurance policies may vary, but landlord insurance is primarily intended to cover damage to a property, loss of rent, and claims made against the landlord if someone is injured on the property. Similar to home insurance, it is not designed to compensate for poor maintenance, and will require a property to be kept in good condition.”

Liability issues

However, liability for negligent landlords is the elephant in the room. While insurers are tight-lipped on this, other parties – although not alarmist – suggest that the subject is no red herring. 

Chris Norris, director of policy and campaigns at the National Residential Landlords Association, says: “If the root cause of the dampness is something inherent in the building or structure that the landlord or landlady has been made aware of and not rectified, such as pipes leaking from the water supply or leaking guttering, then landlords could be liable.

“There are obviously instances when things can be done better but, by and large, we don’t see a culture of negligence. The Awaab Ishak case has definitely shed light on the social sector, but local authorities there are quite often policing themselves, whereas in the private sector the local authority can prosecute the landlord on behalf of the tenant.”

Landlords are generally covered for potential liabilities regarding tenants under standard landlord policies, and sometimes commercial landlords take out more specific bespoke policies with more refined cover. But it is unlikely that the term mould specifically features with either type of insurance because wordings are not specifically written for such claims.

Most tenants are clearly not yet receiving cold calls suggesting they might be due compensation for mould problems, but is a claims explosion likely further down the line? 

Matthew Connell, director of policy and public affairs at the Chartered Insurance Institute, says that while mould may not be systemic enough for personal injury lawyers if things start happening on a scale that they can industrialise, then it would “be extremely worrying” for insurers.

The lawyer’s view             

Personal injury lawyers that Insurance Post reached out to were no more keen to be interviewed than insurers on this subject – and they would surely have a vested interest in creating publicity if they perceived this to be an area of low-hanging fruit.

Neither Irwin Mitchell nor Slater and Gordon found it appropriate to comment, and the Association of Personal Injury Lawyers (APIL) was unable to find any member firms to speak to Insurance Post.            

An APIL spokesperson says: “We can’t comment on the impact on insurers, claims management companies or landlord insurance of a potential increase in this sort of claim because we are not placed to know. But from a personal injury point of view nothing has changed. If someone has been harmed, and it’s because of proven negligence, then a claim can be pursued.”

However, Toby Scott, partner at Clyde & Co, a law firm specialising in insurance matters, points out that lawyers in the US were pushing “toxic mould” claims some 20 years ago.

Farming activity and injury claims

Scott says there has already been some claims from farming activity in the area in the UK during the past few years involving non-fatal cases, and that is becoming an increasingly prevalent issue for liability insurers, particularly because of social conditions. However, he suspects these sorts of claims may be more attractive to smaller personal injury players rather than big firms that may find that the low compensation levels involved make the business case difficult.

Clyde & Co is currently coming across several mould cases a month being made against landlords, and they are tending to be for minor injuries that are often presented on the back of housing disrepair claims under legislation such as the Landlord and Tenant Act 1985 or the Defective Premises Act 1972.

Scott, who is also a member of the Forum of Insurance Lawyers’ disease sector focus team, says the liability claims for injury generally involve sums of less than £5,000 through the small claims or fast-track systems, although there are occasionally larger amounts. He explains that what often happens is that a claim is made for financial recompense and, if the surveyor appointed finds mould, it could also give rise to financial compensation for associated respiratory injury also.

The lawyers involved will produce experts who will find something and will generally look to pinpoint entries in medical records that coincide with alleged cases of mould. Success rates tend to be relatively low, and the fact that vulnerable individuals often have other pre-existing conditions can provide a barrier to proof, Scott notes.

He says: “We see a much higher incidence of claimants without the benefit of legal representation in these claims rather than in some other injury claim types.

A landlord who can’t provide a relatively recent survey of their property may find it increasingly hard to get suitably cost-effective liability cover.”

Toby Scott

“It’s fair to say that the financial constraints of public sector and social housing landlords won’t be helping, but I think some claims may also be occurring with private landlords.

“Claims experience is likely to make underwriters more demanding, and a landlord who can’t provide a relatively recent survey of their property may find it increasingly hard to get suitably cost-effective liability cover.”

The main reason for optimism for liability insurers is the realisation that if such appalling cases such as Ishak’s start happening more often, then the subject will quickly rise to the top of the social agenda and landlords will receive much greater scrutiny.

Indeed, Michael Gove, is already tackling social housing landlords who are failing their tenants, and the Housing Ombudsman has recently written to social landlords about complaints relating to damp and mould.  Some landlords won’t be helped by many properties being prone to mould risk simply because of their structural and material design. 

Karl Evans, chartered building surveyor and loss adjuster at McLarens, says buildings from the 1960s and 1970s, which were largely built using concrete and framed with limited insulation properties, often suffer from cold bridging, and explains: “When there is an event that results in excessive moisture, such as an escape of water or flooding, mould can develop quickly.”    

A cruel winter could also take its toll, particularly during the current economic environment.

Chris Walsh, commercial claims director at Axa UK, says the volume of personal injury claims against landlords due to housing disrepair may increase because of the wider cost-of-living and energy crisis. Walsh says: “It’s therefore important that landlords take mould seriously and, if there is doubt, contact professionals to help determine the cause of the problem.”

Risk management

Some insurers are providing educational information on how homeowners can prevent mould, and spelling out key messages like the need for prompt action to stop it becoming established and subsequently breeding, and that it’s crucial to deal with its root cause rather than just paint over it. But should they go beyond this?  

Connell says you could argue that insurers should start offering risk management advice when it comes to mould, but he added he is not aware of this happening – yet.

He notes: “They could be deterred by the knowledge that they may be liable if they do an assessment of someone’s home, and give advice on mould that doesn’t work out. Remember that insurers weren’t received that well when they intervened and did risk management in a proactive way around telematics. People tended to feel it was symptomatic of a ‘big brother’ society.”

Mark Curtis, associate director at insurance-focused building and construction consultancy Brawdia, emphasises that the energy ratings of homes, stock conditions and investment programmes are all key factors that impact the risk of mould from a building perspective.

Curtis says: “Anything insurers can do that raises awareness of the risks, and encourages or supports landlords in implementing best practice in managing properties, would be beneficial. This could range from having policies and procedures in place specifically around damp and mould to stipulating regular property inspections of building fabric, in addition to advice regarding the causes of condensation.”

Insurers are part of a value chain, which can include brokers, property management companies, landlords, leaseholders, tenants and more. This chain needs to be a relationship, with all members reporting and taking action when issues occur."

Helen Bancroft

Helen Bancroft, casualty account manager at Allianz, says there is a collective responsibility extending to all relevant parties when it comes to protecting property and a building’s occupants from mould. 

Bancroft says: “Ultimately, insurers are part of a value chain, which can include brokers, property management companies, landlords, leaseholders, tenants and more. This chain needs to be a relationship, with all members reporting and taking action when issues occur.”

Hopefully, insurers will pull out all the stops to raise awareness of the potential dangers of mould, and how to prevent it, but their actions in doing so will represent something of a double-edged sword.  

Increases in landlord inspections, and in tenant awareness of the health risks posed by mould, will inevitably lead to a increase in building insurance claims. Even though most mould claims will be excluded on grounds of poor maintenance, there will still be a significant proportion that relate to insured perils.