Although the insurer contended the Texas Supreme Court had previously decided that mold was never covered under a homeowner's policy, the Court found coverage for mold damage to personal property in State Farm Lloyds v. Page, 2010 Tex. LEXIS 415 (Tex. June 22, 2010).
The insured discovered mold and water damage to her home and to some of her personal property. She filed a claim with State Farm pursuant to her homeowner's policy. Leaks were found in the plumbing system and sanitary sewer lines. Although State Farm covered the costs of some repair and remediation, a dispute arose over amounts needed to fully repair the home and its contents. The insured eventually sued.
The policy covered the dwelling from all risks of physical loss described in the policy unless excluded. Similarly, physical loss to personal property was covered if caused by a listed peril and not excluded. Accidental discharge or leaking of water from a plumbing system was a listed peril for both the dwelling and personal property sections of the policy. But loss caused by mold was excluded from coverage of the dwelling. On the other hand, the mold exclusion did not apply to the personal property section of the policy.
State Farm argued that Fiess v. State Farm Lloyds, 202 S.W. 3d 744 (Tex. 2006) was controlling, and the trial court agreed. In Fiess, Tropical Storm Allison caused flood damage to the home. The flooding caused some mold contamination, but most of the mold was caused by leaks from the roof, plumbing and air conditioning. The Texas Supreme Court determined the ensuing loss provision reinstated coverage only as to losses caused by an intervening cause (like water damage) that in turn followed from an exclusion. Therefore, the ensuing loss provision did not reinstate coverage for otherwise excluded mold damage. But the court also noted that the insureds in Fiess did not appeal whether personal property was covered for mold damage resulting from plumbing leaks.
Here, as in Fiess, the policy clearly clearly excluded mold coverage for the dwelling. The mold exclusion, however, was expressly removed and not applicable to the personal property section of the policy that covered plumbing leaks. Therefore, the insured's claims for mold damage to her personal property resulting from plumbing leaks was covered under the homeowner's policy.
