Private Investigation Services - LKA Group

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The Unseen Danager of Flooding

The recent catastrophic climate events in the eastern states of Australia have resulted in new chapters being written in what is already a remarkable Australian history strongly influenced by Mother Nature.

Apart from floods, in Western Australia there has been devastation by fire and of course in places further afield, enormous tragedies inflicted by earth quake and tsunami.

The events of the past couple of years provide further proof about the accuracy and wisdom of Dorothea McKellar’s famous poem “My Australia”. We have indeed seen too much of the droughts and flooding rains; many of us have also experienced the terror McKellar spoke of in our wide brown land.

Loss Adjusters of course have been extremely busy and with what help we can provide, slowly the pieces are being put back together again in many Australian communities. These types of events prove yet again the value of insurance in maintaining the assets we all own or use as individuals and which communities also expect to be replaced after such catastrophes.

Policies typically provide for repair or replacement, but does a Loss Adjuster have to look at more than this in some situations? At LKA we take our overall role very seriously because flooding events raise some unique issues, one of the most potentially significant of which is the major threat posed by toxic mould and bacteria which can grow if a building is not correctly restored and repaired. Buildings affected by toxic mould and bacteria can have potentially significant health implications for all occupants and even casual visitors.

If recent Australian experience is a guide, severe flooding events typically take place during periods of significantly elevated humidity and are often accompanied by warm temperatures; these conditions are of course ideal growing conditions for moulds and bacteria which will happily multiply in huge volumes behind walls, door frames, inbuilt cabinets, under vinyl flooring, inside doors and beneath carpets in water affected buildings. Moulds and bacteria are of course everywhere and part of life, but it is the ones which are potentially risky or dangerous to human health that we need to be concerned about; these may already be present in the building just waiting for a suitable growth opportunity to arise, or may be washed into the structure from who knows where during a flood.

Fortunately, knowledge about these risks has significantly increased in recent years. Although in many cases we might not thank them, the USA has led the way in this field and opened peoples’ eyes to the problem. In the US there has already been significant civil litigation arising out of situations where buildings were damaged by water or flooding but where restoration and repair works did not consider the potential longer term implications posed by toxic mould and bacteria. In Texas, the Ballard case of 2001 produced an award of US$32M and another case in California was settled for US$17M following an initial claim for US$26M. Those at potential risk of being dragged into civil litigation include insurers, building managers, property owners, employers, repairers, restorers and indeed, Loss Adjusters themselves.

In arranging repairs, Loss Adjusters and insurers certainly need to consider that all buildings which have been affected by flooding may present with potentially significant mould and bacteria infestation. Experience shows that even if buildings are promptly treated by removal of carpets, loose contents, stripping of vinyl flooring, removal of low level plaster and skirting boards, use of bactericides and other ‘routine’ restoration methods, they can still record very significant and potentially dangerous levels of toxic mould and bacteria months after the event. Combine this with the fact that some mould spores live for up to 20 years and embed themselves in the very structure of buildings, then it becomes clear there is a significant risk to be managed.

Our view is that if there is any doubt, expert advice should be sought so as to develop a comprehensive remediation strategy which is unique to each situation. Remediation is commonly not easy; it is often invasive and destructive, apart from costly and time consuming. Ongoing monitoring of a building and further works may also be required to ensure satisfactory risk levels are ultimately achieved.

The risks of course are not just restricted to claims involving flooding; they are there and of equal importance in all claims where structures have been damaged by ingress of water.

It seems to me that this represents a largely unseen and unrecognized part of the insurance claim process whereby the insurer and Loss Adjuster act not in the interests of saving a few dollars or in just getting the claim closed, but in the long term health interests of the building and its occupants; perhaps it is one of the ultimate expressions of Utmost Good Faith. For so many reasons it is what we should all expect our insurers and their representatives to be doing where there is an obvious need; are yours?


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