What to do about MOULD
Spore point: mould like this is commonplace in Australian buildings
Built up by spores from fungi organisms, mould comes in countless different forms, many of which carry the potential to cause widespread damage – to people and the buildings they live in.
Insurers have always been mindful of the commonality of mould growth and the severity of risks it poses, which is why most home and contents policies typically only elect to cover mould damage that stems from insured events, such as storms, leaking appliances or bursting pipes.
Despite the selective criteria, insurers still saw a notable rise in mould claims as the effects of last year’s devastating wet weather across eastern Australia were felt. In an analysis of 20,000 mould claims between October 2021 to September last year, Suncorp found about 37% occurred in the month after the historic floods in Queensland and NSW in February and March last year.
Oliver Threlfall, the Chairman of restoration company Steamatic, has noted a 30-40% rise, telling Insurance News that the uptick in claims came “due to time delays in being able to respond to the quantum of claims”.
“Moisture in buildings if left unattended for periods beyond three to four days is very likely to experience mould issues,” he says. “The resources in Australia were not enough to attend to all claims in this time period.”
But not all mould originates from the blowback of the costliest natural disaster event in Australian history. Research from the Victorian Building Authority (VBA), a state regulator, identified increased moisture accumulation and indoor mould in buildings stemming from poor design work and non-compliance with waterproofing requirements on balconies and internal wet areas.
The study also documented a general misunderstanding of mandatory requirements by building practitioners, noting poor documentation work that failed to meet relevant standards.
Researchers from Victoria University utilised data from domestic building insurance claims – previously known as builder’s warranty insurance – lodged with the Victorian Managed Insurance Authority (VMIA).
The state insurer provides domestic building insurance to cover homeowners for incomplete or defective building work, with builders in Victoria required to take out a policy for works valued above $16,000.
The research shows more significant work has been needed to educate practitioners on the importance of waterproofing practices, noting that of the 2178 claims analysed, 92% had at least one water-related defect.
Architectural scientist Tim Law, who specialises in mould in Australian buildings and contributed to the VBA study, tells Insurance News that several factors can be leading contributors to mould growth.
“Mould can arise from a number of causes including water ingress from failed weatherproofing and waterproofing, water loss from plumbing failures, particularly from burst braided hoses, rising damp from poor site drainage or failed basement tanking, high humidity (in warm and humid climates) as well as condensation in cool climates,” Dr Law says.
While there is limited long-term data to show whether mould in buildings is rising, he notes a couple of trends that likely point to this happening.
A 2016 Australian Building Codes Board scoping study into condensation found an increase in energy efficiency requirements in the United States, United Kingdom and Canada caused building condensation levels to rise and to contain more water vapour, with similar outcomes observed in Australia.
“The introduction of mandatory minimum energy efficiency performance in new Australian buildings, particularly the introduction of 6-stars under the Nationwide Housing Energy Rating Scheme was accompanied with higher instances of condensation,” Dr Law says.
“In 2023, Australia moves towards 7-stars, and the question is whether the increased condensation provisions in the National Construction Code are enough to offset the increased vapour accumulation.”
Dr Law highlights a 2016 ABCB survey of building practitioners that estimated about a third of new houses and apartments had condensation issues. He says when considering other risk factors, it is “very likely that the majority of residential buildings have mould problems”.
Dr Law also underlines that an increased rate of building industry insolvencies in the past two years due to rising material costs and increasing interest rates could also lead to more incidences of mould growth.
“Incomplete buildings left exposed to the elements increases microbial contamination prior to occupancy as well as leading to moisture entrapment in building materials, many of which were not intended for long-term exposure,” he says.
With a likely increasing number of cases, insurers can expect to see more mould-related claims in the coming years, which Dr Law says will invariably leave policyholders with higher premiums.
“A consideration is that if claims for mould continue to escalate [in frequency and cost], it could potentially lead to increased premiums as well as potential limits or exclusions on mould coverage,” he says.
He says that in future, establishing causality for “complicated issues” such as non-compliant building design and construction claims will be critical in an insurer’s assessment of whether a policy would cover mould damage.
He wants governments to do more to mitigate the risk of mould, saying that “critical decisions” will “determine whether the problem is brought under control”.
But he also says that building practitioners must comply with regulations and mitigate risks to make certain that insurers don’t leave them behind.
“At a recent building surveyor conference I attended, an insurance broker mentioned that some professional indemnity insurers are considering excluding mould complaints from PI cover,” Dr Law says.
“Such a move would leave practitioners personally liable to defend such complaints from homeowners.”
He says that if such a move occurred, practitioners across the industry would need to “exceed minimum standards to reduce their exposure”.
Beyond the damage to buildings and contents, mould can also carry severe health implications, with increased awareness of its link to chronic inflammatory response syndrome (CIRS) following a 2018 parliament inquiry.
The inquiry noted that respondents who were found to have CIRS commonly reported mould exposure. Although it did not attribute a direct causal link between mould and CIRS, the inquiry recommended further research.
Last May, the National Health and Medical Research Council gave researchers from Macquarie University a $1.27 million grant to further examine the origin of biotoxin-related illnesses such as CIRS.