How To Handle Mold And Avoid Liability As A Contractor
Mold remediation experts are not the only contractors who encounter mold on a fairly regular basis. Often times, the homeowner does not learn that there is mold in their house until a contractor points it out. This may be a restoration contractor, an HVAC contractor or even a plumbing contractor. Read on to find out how contractors can handle mold at their job sites and avoid liability.
Contractors should always warn homeowners if they spot mold on the job even if that is not why they are there. Mold can pose a serious risk to the foundation of the home as well as the health and safety of the inhabitants. The homeowner can then contact an Indoor Environmental Professional (IEP) to fully diagnose the problem.
This should be good news to the homeowner. However, this puts the contractors in a tough position. Over the past few years, there have been a growing number of lawsuits against contractors who pointed out the mold to the homeowner. The homeowners often attempt to place the blame on the contractors as the source of the mold, but why?
A Way Out For The Insurance Companies
The number of claims made to insurance companies regarding mold damage began to skyrocket in the 90s and 2000s. This was good for the homeowner because the insurance providers paid to have the mold removed and the area restored. It was also good for the restoration contractors because the insurance companies were paying them to do their job. The only entity that didn't benefit from this growing awareness was the insurance provider who had to cover the costs.
Insurance companies found a way out of this predicament by including new and more severe mold exclusion clauses in their policies. This meant the insurance companies were no longer paying for mold remediation. The funds had to come from the homeowner, the contractor, a lender, or a third-party source.
Homeowners didn't want to be stuck with the bill so they began opening lawsuits against contractors claiming that the mold was a result of their work. This greatly increased the risk of working for homeowners as well as in commercial buildings.
How Can Contractors Avoid Liability?
Contractors must rely on their own insurance policies to avoid liability in many cases. Their Commercial General Liability (GPL) insurance policy is a standard tool of protection. However, there is a pollution exclusion clause included in this policy. The exclusion states that the insurance does not cover any bodily or property harm caused by the escape, dispersal, or release of pollutants.
Whether mold is considered a pollutant that is not covered by this policy is a widely debated issue. Court cases often tip one way or another without offering any universal standings. Some cases have found the policy to be too ambiguous with their definition of pollution. Others have classified mold as an airborne pollutant.
Contractors are not advised to leave their career up to chance. Instead, contractors should consider investing in new insurance policies that are specifically designed to cover mold and pollutants. (As well as the standard GPL policy) Contractors Pollution Liability (CPL) covers liability for such pollutants with a clear definition that includes mold or fungi.
CPL may be the best tool currently available for contractors to avoid liability when mold is discovered on a property. That is in addition to proper risk management. Properly managing risk means carefully choosing what customers to work with and how the problem is approached if detected.
Dealing With Customers
The customers a contractor chooses to work with, how well they document their work, and how they approach the customer regarding mold will play a big role in how the situation unfolds. First, it's a good idea to avoid working with customers that already seem disgruntled with insurance companies.
This is especially true for mold remediation contractors where the homeowner already knows of the problem and isn't happy that their insurance policy doesn't cover the loss. They may still try to pin further damage on the contractor that outweighs the bill for the services provided. These customers are time bombs that should be avoided when possible.
Addressing the issue as carefully as possible is the final point of recommendation. It's important for contractors to put themselves in the homeowner's position. Mold remediation can be expensive work and the insurance providers have dumped the costs on the homeowner. They need to approach the subject carefully, with empathy, and with a proper course of action.
Risk Exists
It is impossible to work as a contractor and avoid risk altogether. However, by utilizing ethical work standards, by carefully choosing and approaching customers, and by adding CPL policies to their arsenal they can greatly reduce the risk associated with mold.
Guest Blogger: R.S. Hall is the owner of several successful businesses and the publisher of the website www.moldremovalrescue.com which provides solutions for mold problems.
The information you include in your proposal comes from your many years of experience and education. For this you deserve to be compensated. I would also suggest your proposal probably only contains a level of detail adequate for you and your team to build from. In reality your proposal may not have adequate detail for others to build from. This may be the best reason to explain to your prospect why you won’t leave it with them unless they buy from you.
I also suggest you consider the possible liability you take on by creating specifications, in particular project plans, and leaving them with a prospect that does not do business with you. By doing so you may have put yourself into a position where the prospect or another contractor actually works from them. If they have challenges when building the project and decide those challenges were caused by your plans and or specs, they may have legal rights to sue you. Even if they technically don’t have legal grounds, what if they do sue you? Regardless of whether you feel you are innocent or guilty, you will need to cover your own legal expenses if you end up in court. Most likely you will not be able to re-coup your legal costs even if you are found innocent. If you are found guilty you may actually be required to pay the legal expenses incurred by the person suing you.
The details: He uses his own tools and performs services in the order designated by the corporation and according to its specifications. The corporation supplies all materials, makes frequent inspections of his work, pays him on a piecework basis, and carries workers' compensation insurance on him. He does not have a place of business or hold himself out to perform similar services for others. Either party can end the services at any time.
The details: A signed contract established a flat amount for the services rendered by Bill Plum. Bill is a licensed roofer and carries workers' compensation and liability insurance under the business name, Plum Roofing. He hires his own roofers who are treated as employees for federal employment tax purposes. If there is a problem with the roofing work, Plum Roofing is responsible for paying for any repairs.
This language is best used at the beginning of your proposal
I also suggest you consider the possible liability you take on by creating specifications and or project plans and leaving them with a prospect that does not do business with you. By doing so you may have put yourself into a position where the prospect or another contractor actually works from them. If they have challenges when building the project and decide those challenges were caused by your plans and or specs, they may have legal rights to sue you. Regardless of whether you feel you are innocent or guilty, you will need to cover your own legal expenses if you get to court and most likely will not be able to re-coup your legal costs even if you are found innocent. If you are found guilty you may even be required to pay the legal expenses incurred by the person suing you.
“Schemes like this to avoid paying premium undermine the purpose of workers’ comp insurance – to protect workers who are injured on the job – and will result in unwanted attention from our investigators.”
How would you look at that? I know one contractor who had that happen to him. When I asked him about it he told me he was definitely scared about going to prison so he spent big money to hire a good lawyer to try to keep him out of prison. He said the lawyer was successful but he was definitely sweating it right up until the final verdict. He didn’t get any jail time but did have to pay a lot of money in fines. He also told me that when everything was said and done, and based on all the money he saved over the years by cheating, the fine and lawyer fees were far less than the money he saved. He told me he felt it was worth the risk.
Our friends at the Equal Employment Opportunity Commission (EEOC) have recently decided that “equal opportunity” should include convicted felons. That is according to a bizarre and confusing “guidance report” recently issued by the EEOC directing employers to hire more felons and other ex-offenders . And if you refuse? Well, then you risk committing a federal crime.
Since the EPA RRP rule came into effect in April of 2010 renovation contractors have debated and bantered the topic of doing lead testing before they offer to sell and or perform renovations at pre 1978 properties. Due to 
Often discussions on these topics get passionate when contractors express their concerns about the liability they feel the rule exposes them and their businesses to even if they follow the rule and comply with all of its lead safe work practices and documentation requirements. Many contractors feel the EPA should have written some level of protection from liability into the rule for those renovators who abide by it. 
Time it takes to do the testing and fill out the paperwork
There are typically no easy answers to these considerations or guaranteed ways contractors can sell and do their work to prevent the possibility of liability. That said education about the considerations and available options is probably the best way for contractors to protect themselves and their business.
Several years ago I helped one of my remodeler coaching clients plan out how to offer and perform snow removal services. He called me because he realized there were a lot of things he should consider before just sending his guys out with there with shovels and axes. Below is a list of considerations from my coaching session notes created during my discussions with him. By sharing my notes my hope is that you will find them helpful, you will price the work for profit, you and your employees will be safer while performing the work, you can use the opportunity to create new customers and you will generate future work from those that hire you.
Discussed properly equipping his employees to avoid risk and health problems. Confirmed he has fall protection equipment needed to meet OSHA requirements and employees know how to use it. Should try to do as much of the work as they can from the ground.
Look at the work as a good way to meet new clients. Because there might be more demand than he can service, be selective about who he will work for, make sure they fit within his target customer/location niche.
Discourage use of Red Bull, maybe even coffee. Suggested hot chocolate and donuts.
Over the years, I have heard from many contractors — some of them with very big companies — about how they handle drafting their business contracts. Many times, these documents consist of a collection of "stuff some guys I know have in their contracts" cobbled together. It doesn't even occur to these business owners that laws vary by state, or that they might need an expert to customize contracts to fit their own business's unique needs. By not having a professional create legal documents that fit a clear sales procedure and overall company goals, they are putting their company at serious risk. I know because we learned the hard way, too. 
In 1998, we incorporated as Myers Constructs, Inc., because we had taken on a huge and complicated renovations project. We knew we needed serious business structures in place to protect us, so in 2001 we asked Dana Priesing, an attorney who is now our office manager, to read our contracts to look for problems. (She had us sign a contract before she did so!) Dana interviewed Tamara to better understand how she sells, and how our customers buy, and then gave us a few recommendations right off the bat:
