A property policy's limitation on mold coverage was challenged in MMI Reality Serv., Inc. v. Westchester Surplus Lines Ins. Co.,Civ . No. 07-00466, 2008 U.S. Dist. LEXIS 93653 (D. Haw.  Nov. 17, 2008).

     Kahala Mall in Honolulu suffered flood damage after the severe rains of March 2006.  The Mall was insured by Westchester for "direct physical loss or damage to" the Mall.  The policy had limited coverage for mold when it was "the result of flood that occurs during the policy period" and "only if all reasonable means were used to save and preserve the property from further damage at the time of  and after that occurrence."  Under such conditions, Westchester would pay up to $15,000 for loss or damage by mold.

     After the 2006 Flood, the Mall submitted a claim totaling more that $2.97 million.  Westchester challenged much of the claim, but eventually paid $1.23 million.  The Mall then sued, seeking additional coverage for, among other things, mold damage.   

     Westchester moved for partial summary judgment as to mold coverage.  The federal district court found the mold provision to be clear on its face.  The $15,000 limitation existed where (1) the mold results from flood and (2) "all reasonable means were used to save and preserved the property from further damage."  Westchester's motion was granted to the extent it sought an order declaring that coverage for loss or damage caused by mold is limited to $15,000.  Pursuant to the policy, this covered the cost to tear out and replace part of the building if needed to gain access to mold, the cost of testing performed after restoration of the property if there is reason to believe mold is present, and any increase in loss caused by mold.