Mold Damage is Not a “Physical Loss” According to Court and Insurer

Universal Image Productions, Inc. v. Federal Insurance Company

The U.S. Court of Appeals, Sixth Circuit, holds that mold contamination, while certainly inconvenient and irritating, does not result in a direct physical loss to a building.

The court relied on the opinions of several other courts around the country in determining that direct physical loss or damage requires tangible damage, an actual physical change to the property, or a loss of use of the property.

In this instance, mold contamination did not meet the requirements, and so, the insuring agreement pertaining to direct physical loss or damage was not met.

The insured was not entitled to coverage under the terms of its policy.

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