Louisiana Court Of Appeal Holds Mold Remediation Costs Incurred Following A Covered Peril Fall Within A Mold Sub-Limit Because Such Costs Would Not Have Been Incurred But For The Mold

A Louisiana Court of Appeal affirmed a trial court’s ruling that mold remediation costs incurred as a result of a covered peril fall within the mold exclusion and endorsement of a homeowners’ policy because such costs would not have been incurred but for the appearance of mold. DeFelice v. Federated Nat’l Ins. Co., 21-0179 (La. App. 5 Cir. 1/19/22); 2022 La. App. LEXIS 53.

Plaintiffs sought coverage under a homeowners’ policy for water damage caused by leaking plumbing and resulting mold. The insurer paid a sub-limit for mold coverage contained in a mold endorsement, but the insureds desired coverage for additional amounts and filed suit. The insurer moved for summary judgment that its mold endorsement limited coverage for mold damage to the sub-limit stated in the endorsement. The trial court granted the motion, and the insureds appealed.

On appeal, the insureds argued that “if a covered loss occurs and then mold forms, all subsequent damages resulting from mold must be covered,” and that “mold is excluded only when it emanates from a source independent of the underlying covered peril.” The court rejected the first argument as such an interpretation would render the mold exclusion and endorsement meaningless. It rejected the second argument because case law recognizes “that once mold appears, it can cause additional damages or losses that would not have occurred, but for the appearance of mold, and are therefore, subject to the applicable provisions of a mold exclusion and endorsement.”