The Biggest Risk to Post-Hurricane Victoms: Mold by Envirovantage | Nov 6, 2012 | Mold Source: Business Insider Citi strategist Jeffrey Berenbaum and his team, in their latest weekly client report, look at the risks posed to commercial mortgage-backed securities (CMBS) by the destruction of Hurricane Sandy. Citi, like most other research shops that have weighed in on Sandy’s impact on CMBS, says it’s both (a) too early to tell the specific implications of the hurricane and (b) it’s likely not going to have any market-wide effect. However, one of the idiosyncraticrisks that properties flooded by Sandy could face, according to Berenbaum, is mold damage – and a lack of mold insurance to cover it. In the note, Berenbaum writes: Some Unusual Risks — Beyond the basic issues of standard insurance policies, a long recovery in flooded areas could present some unique risks. In particular, mold damage could likely be the largest risk to properties that remain flooded for weeks. Historically mold was usually excluded under a general insurance policy, and most CMBS loans only required mold insurance if there have been environmental issues at the property in the past. Thus, we expect that most of the properties do not have mold coverage, and those properties that do have a mold policy are not likely to have coverage for the full building value.