Defective Pipe Causes Mold at Senior Living Community

Acknowledgement to XL Environmental

THE CLAIM
An XL insured general contractor was hired to construct a senior living community that included two residential towers, plus a care center and parking garage. Upon project completion, excessive moisture and mold growth were discovered in the care center. The moisture and mold problems were severe enough that occupants of the care center had to be relocated. The situation was remediated and the care center was reconstructed under a multi-million dollar change order. Water infiltration was initially believed to have come from a defective pipe penetration created by the mechanical contractor. The owner filed suit alleging over $50 million in damages related to project delay, project defects, and mold.

THE RESPONSE
XL worked closely with the insured and its various insurance carriers to assess the allegations, policies and coverages available. The allegations and damage amounts changed and escalated throughout the claim handling process, reaching $100 million. XL worked with and defended the insured throughout the process. It was ultimately determined that all of the policies except XL’s Environmental policy contained mold exclusions.

THE SOLUTION
Our insured general contractor was ultimately liable for the actions of their subcontractors which included liability for the mold portion of the claim. XL made a timely policy limit payment of $5 million for mold damages, in conjunction with payment by the insured’s general liability carriers for construction defect claims, resulting in a total settlement of over $50 million.

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