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Does your Homeowners' policy cover lead poisoning?

Byline: Christine G. Barlow, CPCU

The current water crisis in Flint, Mich., has brought the subject of lead poisoning to the forefront of the news.

It began in April 2014 when Flint changed its water supply but did not apply corrosion control treatment to the water, which allowed the water to leach lead from the pipes and poison the residents, particularly the children.

Along with lead in pipes, lead paint has been a known cause of concern for several decades. Rental dwellings often have lead issues. Because of this, the Jersey City, N.J., Insurance Services Office has a few state-specific forms that either exclude or provide minimal coverage.

Maine, Massachusetts and Maryland all have lead-related endorsements. This article focuses on the dwelling property coverages and exclusions for these three states, although there are similar endorsements for Homeowners' and Commercial properties. The nature and coverages are similar.

It started with Ancient Rome

The widespread use of lead goes back to Roman times. In ancient Rome lead was considered the father of all metals, used for a variety of items from dishes, pots and pans to face powders, rouges, mascaras, paints, a condiment for seasoning food, disguising inferior wine, and even as a spermicide.

The vast network of plumbing for which the Romans became famous was constructed with lead pipes. Although aware that lead could cause serious health problems, they minimized the hazards, not realizing that long-term, limited exposure was still dangerous. Madness, sterility and dementia were common results of lead poisoning.

In the early 20th century lead was used in paints for furniture, walls, cribs and other items. As early as 1904, an Australian physician made the connection between lead paint and lead poisoning in children. It causes convulsions, encephalopathy, nervous system damage, delayed development and other illnesses, including death. It tastes sweet so children may put lead chips or toys with lead dust in their mouths.

By the early 1920s countries began banning the use of lead paint indoors, but the United States didn't ban it until 1978, leaving many still exposed, especially in older houses. This is where the exclusions come in. Insured can't be liable to themselves for having lead paint in the home, but they are certainly liable to tenants to provide a safe environment.

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Maine: DL 24 43 Lead Poisoning Exclusion

The Maine form, DL 24 43, Exclusions, Paragraph F. Coverage L Personal Liability, Exclusion 7, is for bodily injury as a result of lead poisoning. Because an insured may have inherited a home or just decided to rent out an older home, the lead liability exclusion does not apply until 31 days after the Maine Department of Human Services or a lead inspector has given notice to the insured or anyone managing the property that a lead hazard exists in the dwelling and that it needs to be removed, replaced, or securely covered up within 30 days of receipt of the notice.

This gives insureds time to address and correct a problem they didn't know they had until the inspection. If the insured doesn't follow through on the requirements and correct the issue in the time allowed, the exclusion is then in force.

Once the hazard has been removed or remediated, the exclusion no longer applies. Any injury from lead poisoning would be covered, although it is highly unlikely to occur. The exclusion is not a mandatory form, but underwriting may require it on rental dwellings of a certain age when lead exposure is possible.

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Maryland: DL 24 52 Coverage for Lead Liability

Maryland's form, DL 24 52 Coverage for Lead Liability, requires the insured to schedule the property that is to receive coverage for lead liability. The endorsement is built around state statutes regulating lead exposure in residential property.

The form defines certain key terms that insureds and agents need to understand, including the following:

* Affected property is defined as: Rental property constructed before 1950 that contains not more than one rental unit or not more than one for which an insured makes an election under the Maryland Environment Article subtitle, which has the purpose of reducing childhood lead poisoning while maintaining affordable rental housing, or

* A rental dwelling unit constructed before 1950 that contains more than one rental unit or a property with more than one rental dwelling unit for which the insured makes an election under the statute.

Elevated blood lead must be in a "person at risk," that is, someone under 6 years of age, a pregnant woman, or someone who is not an insured who resides or is regularly at the affected property for at least 24 hours per week. In order for lead exposure to be a serious hazard, exposure must be consistent over a period of time; someone exposed for less than 24 hours a week is not thought to be exposed sufficiently to suffer adverse effects. Relocation expenses include all expenses brought on by the need to relocate the tenant's household to lead-safe housing of comparable size and quality. This includes moving and hauling expenses, HEPA-vacuuming of all upholstered furniture owned by the tenant that was at the affected property, payment of a security deposit at the lead-safe housing, and installation and connection of utilities and appliances. If the relocation is temporary, then meal expenses are covered if the new location does not have preparation facilities, and the cost of storing furniture and other belongings is included as well. Rent subsidy is defined as the difference between the rent at the affected property and the rent at the lead-safe housing to which the tenant has been relocated. The amount allowed is no more than 150% of the existing rent each month and lasts until the at-risk person with an elevated blood level reaches age 6, or the child born to a pregnant woman reaches age 6. Rental dwelling unit is a room or group of rooms forming a single independent habitable rental unit for permanent occupation by one or more people. The unit has living facilities with permanent provisions for living, sleeping, eating, cooking and sanitation. This would be a standalone home rented to others, for example.

Additional requirements in Maryland

Coverage is provided under very specific circumstances in Maryland. The insured or his agent must register the property with the Department of the Environment, the property must pass the test for lead-contaminated dust as set forth in statute, perform the lead hazard reduction treatments so that the property complies with the standards set forth in statute, and obtain a copy of a verified report from a lead paint inspector accredited by the Department of the Environment certifying that the property is in compliance with statute. Once this has been completed then the carrier will pay the expenses of a qualified offer made pursuant to statute. All payments will be made to the service provider other than those to be paid to the "person at risk" or the child's parents or legal guardians.

Maryland cancellation and nonrenewal procedures

The final section adds specific cancellation and nonrenewal procedures that apply to the endorsement coverage only; the standard conditions apply to the rest of the property.

Cancellation or nonrenewal are allowed when the insured fails to:

* Pay premiums due.

* Perform lead hazard reduction treatment.

* Allow the carrier or its designee reasonable access to the property for inspection for the presence of lead.

* Adhere to the terms and conditions of the coverage.

* Comply with, or maintain compliance with, the lead hazard reduction treatment standards requirement required in the law.

The coverage may be reinstated if the insured provides the carrier with a new verified report from a lead inspector accredited by the Department of Environment. The statement must verify that the violation that caused the cancellation or nonrenewal has been corrected within 30 days of the mailing of the notice of the cancellation or nonrenewal.

Standard notice requirements apply. Notices of cancellation must be mailed 10 days before the date of cancellation when cancellation is for nonpayment, and 45 when cancellation is for any other reason.

A copy of the cancellation is also provided to the Maryland Department of the Environment, including the results of any inspections if the cancellation is based on the results of that inspection.

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Massachusetts: DL 24 41 Lead Poisoning Exclusion

Similar to Maryland, the Massachusetts form, DL 24 41 Lead Poisoning Exclusion, first redefines bodily injury in reference to the exclusion as harm, sickness or injury arising out of lead poisoning. Exclusions are then added. The first exclusion is for gross or willful negligence. Gross negligence is often defined as serious carelessness or a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both. This is just short of an act intended to do harm. Such carelessness is not insurable.

Also excluded is an injury caused by the presence or exposure of lead in or on a residential unit including common areas that is rented or held for rental in either a one- to four-family residential building or a condominium or cooperative built before 1978 that is owned by an insured and rented to others.

Remember 1978 is when lead paint was banned in the United States, so buildings constructed after that are not a hazard. Likewise any other structures on the same premises as the residential buildings are excluded, and any appliances, furnishings, fixtures other than plumbing that are owned by the insured and rented to others and contained in the rental dwellings are excluded as well.

As with most insurance coverage exclusions, there are some exceptions that you should review with your agent or broker.

Massachusetts: DL 24 42 Coverage for Lead Poisoning

Along with the exclusion for lead liability, Massachusetts law allows an endorsement for coverage for lead poisoning. The insured is able to schedule a specific coverage amount at a specific location or locations.

The exclusion, DL 24 42 Coverage for Lead Poisoning, defines bodily injury as harm, sickness or disease that results from lead poisoning and the care required to treat such injury. The injury must result from the scheduled property including common areas used with that property due to the presence or exposure of lead. As in the earlier exclusion, gross or willful negligence is excluded. The maximum coverage amount is the limit listed in the schedule.

EPA recommendations

The EPA recommends having homes inspected for lead under the following conditions:

* Your child has been diagnosed with lead poisoning.

* You live in a home built before 1978 and children will live there.

* You are about to remodel or do anything that will disturb or generate lead-based paint dust and chips.

* You're buying or renting a home. Federal law allows buyers to test to determine the presence of lead hazards.

* You're concerned about possible lead exposure.

The EPA also has resources to help individuals find risk assessors, inspectors, and abatement professionals.

Editor's Note: All forms are available at FC&S Online with your subscription. For more information, visit the website or call (800) 543-0874.

Related: You don't live in Flint? Lead is your problem, too

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Publication:Property and Casualty 360
Geographic Code:1U5MD
Date:Mar 28, 2016
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