ONE MAN’S GARBAGE IS ANOTHER MAN’S GOLD

Salvage. That’s a word buried within insurance policies. 

It is defined as the act of saving property from destruction. Salvage rights are provided to insurance companies in the policies they sell. Basically, an insurer who wishes to “salvage” property (furnishing, draperies, etc.) that would otherwise be destroyed can, given notice, collect these items and try to recover money for them by selling the items at auctions, garage sales, antique dealers, through newspaper ads or direct mail advertising.

 Salvage, however, takes on a whole new meaning when items are contaminated and could potentially cause an unsuspecting buyer to cross contaminate their own property. 

Susan and John Corbit, members of POA, liked to frequent antique shops on weekends. Several months after their insurance company -- a top rated, national firm -- proclaimed that it was cheaper to replace the family’s clothing, furnishings and accessories than to attempt additional remediations, the family stopped by an antique auction and found their household items being auctioned off. No disclosures about the contamination were made and unsuspecting bidders had no idea that they were risking cross contamination of their own home. 

There is mounting evidence that if contaminated items are taken to a home that offers a “host site”, that is a structure where a leak has soaked building materials, the spores will colonize and spread. Sometimes leaks go undetected and the homeowner may not know a host site is being provided. 

In the Corbit’s case, household items were removed and stored in the warehouse of a remediation company for cleaning. Clearance testing was done at the insistence of the family and test results showed high levels of molds, endotoxins and mycotoxins even after remediation. Armed with receipts for the items, the insurer paid about 42 cents on every dollar of actual cost but the Corbits could not find an attorney to represent them because their monetary loss was less than what it would cost to pursue the case ($252,000 in actual damages versus a minimum of $300,000 in out of pocket expenses necessary to pursue litigation). The family put pen to paper and realized it was cheaper to take a beating from their insurance company and John, 61, now has to work a second job just to attempt to replace all that they lost. 

Nondisclosure of contamination of salvaged items is occurring all across the country as insurers seek to recoup money, even if it is to the detriment of someone else. 

Halfway across the country, in Texas, the Lind family had to choose between keeping up mortgage payments on the contaminated house they evacuated or paying for rent; they couldn’t do both. Their insurance company denied their claim for a roof leak saying the leak was a “maintenance problem” even though a storm had ripped shingles off of their roof. 

The Linds, whose twins were sick, evacuated their home and, after one year of paying both mortgage and rent, were unable to continue that expense. Nor could they afford the cost of remediating the home and its contents. The Linds decided to let the mortgage company foreclose on the property. The house was sold without disclosure and the family now residing in the home, coincidently members of POA, have a beef with both the Lind’s insurer for wrongful denial of the claim and with the mortgage company who refused to disclose the known contamination.

It seems that everyone – insurers and lenders – a getting into the nondisclosure game and the dominos may well have begun to fall: 


· Insurers are trying to recoup some of their losses by auctioning off contaminated furnishings to unsuspecting bargain hunters; 

· Foreclosure is becoming a far more attractive alternative for many victims who are unable to fund the cost of remediation; and

· Untenable homes are being removed from tax rolls because of severe contamination, reducing state and local revenues. 


If an individual must take responsibility and disclose known contamination, so should insurers and lenders. Why should business be exempt from these responsibilities? 

Perhaps Congressman Conyers’ Federal Toxic Mold Bill, scheduled for unveiling next month, will help to clarify for business what is expected of them regarding disclosures. Perhaps lenders must be stuck with contaminated properties they can’t unload on someone else before they weigh in on the subject. Perhaps state revenues from property taxes have to be slashed before government steps in and forces insurers to honor their policies or start packing. 

Or, perhaps it will just take a high-powered legislator who fancies antique auctions to enact protections for property owners. 

Check here to read each editorial. New editorials are added frequently so be sure to visit this section often.

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8/19/02
Yeah. That's it. Let's Blame it All on the Lawyers.

7/9/02
REFORMING TORT REFORM:
Three Strikes; You're Out

6/19/02
WANT LOWER INSURANCE RATES?
Federal Mold Bill is the Answer 

5/31/02
What's In A Name

5/6/02
ONE MAN’S GARBAGE IS ANOTHER MAN’S GOLD

4/22/02
TOXIC MOLD: The Best Thing To Hit Insurance In Years  

3/12/2002
Insurance: Another ENRON?

2/27/2002
Having a Horse in the Race

2/20/2002:
The Forest and the Trees

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