Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, July 16, 2006.

Magda Benavides purchased her ground-floor condominium in 1994. Seven years later, mold was found in the exterior walls adjacent to her unit. Benavides’ physician advised her to move out.

She submitted a claim to her condominium owner’s insurance company, State Farm, which hired a civil engineer to investigate. State Farm later denied the claim because it was an excluded loss, which was not caused by an insured peril. The insurer pointed to its policy exclusion for mold.

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Benavides also filed a claim based on water intrusion damage from an upstairs unit. Water leaked into Benavides’ kitchen and living room during remodeling of the second-floor condo, which was promptly repaired by the neighbor.

The insured condo owner brought this lawsuit against State Farm for alleged negligent investigation of her insurance policy claims.

If you were the judge would you order State Farm to pay damages to Benavides for negligent investigation of her policy claims?

The judge said no!

The evidence showed the accidental water intrusion damage during remodeling of the upstairs condo unit was promptly repaired, the judge began. Therefore, neither State Farm nor the upstairs neighbor is liable to Benavides, he ruled.

As for Benavides’ mold damage claim, he continued, State Farm points to its policy exclusion for damage caused by mold, he explained. The evidence showed State Farm promptly hired a civil engineer to investigate the mold and, based on that report, denied policy coverage as an excluded cause of damage, the judge emphasized.

When there is no insurance policy coverage for the mold damage, there can be no liability by the insurer for negligent investigation of a policy claim, the judge ruled. Therefore, State Farm has no liability to the insured, Magda Benavides, he concluded.

Based on the 2006 California Court of Appeals decision in Benavides v. State Farm, 39 Cal.Rptr.3d 650.

(For more information on Bob Bruss publications, visit his
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