Texas Supreme Court Upholds Mold Exclusion in Homeowners Policy

Asked by the United States Court of Appeals for the Fifth Circuit to clarify whether a homeowners insurance policy that contains language excluding mold provides coverage for mold contamination caused by water damage that is otherwise covered by the policy, the Texas Supreme Court has ruled “no.”

Texas Supreme Justice Brister delivered the opinion of the Court, in Richard Fiess And Stephanie Fiess, Appellants, V. State Farm Lloyds, Appellee (No. 04-1104). Chief Justice Jefferson, Justice Hecht, Justice Wainwright, Justice Green, Justice Johnson, and Justice Willett joined. Justice Medina filed a dissenting opinion, in which Justice O’Neill joined.

In his written opinion, Justice Brister stated: “The question in this case is not whether insurers should provide mold coverage in Texas, a public policy question beyond our jurisdiction as a court. The question instead is whether the language in an insurance policy provides such coverage, no more and no less.

“The policy here provides that it does not cover ‘loss caused by mold.’ While other parts of the policy sometimes make it difficult to decipher, we cannot hold that mold damage is covered when the policy expressly says it is not. Accordingly, we answer the Fifth Circuit’s certified question ‘No,'” Justice Brister wrote.

According to court documents, the certified question from the United States Court of Appeals for the Fifth Circuit asked the Texas Supreme Court:

“Does the ensuing loss provision contained in Section I-Exclusions, part 1(f) of the Homeowners Form B (HO-B) insurance policy as prescribed by the Texas Department of Insurance effective July 8, 1992 (Revised January 1, 1996), when read in conjunction with the remainder of the policy, provide coverage for mold contamination caused by water damage that is otherwise covered by the policy?”

Court documents described the policy provision in question as providing:

“We do not cover loss caused by:
(1) wear and tear, deterioration or loss caused by any quality in property that causes it to damage or destroy itself.
(2) rust, rot, mold or other fungi.
(3) dampness of atmosphere, extremes of temperature.
(4) contamination.
(5) rats, mice, termites, moths or other insects.
We do cover ensuing loss caused by collapse of the building or any part of the building, water damage, or breakage of glass which is part of the building if the loss would otherwise be covered under this policy.”

“In this case, it is hard to find any ambiguity in the ordinary meaning of “We do not cover loss caused by mold,'” Justice Brister wrote. “While the ensuing-loss clause that follows may be difficult to parse … few ordinary people would imagine that it changes the meaning of the first sentence to read ‘We do too cover loss caused by mold.'”