Builders and homeowners love the insulated material that gives homes and other structures the sharp, stucco look of classic English style.

        But insurers have a growing concern with a popular faux-stucco product: toxic mold.

Ron Schaber of Valley Interior Systems installs Dryvit, a synthetic stucco, at the Great American Ball Park. (Glenn Hartong photo) | ZOOM |

        They're threatening to cancel or significantly change policies of contractors that install the stucco-like material — a move that could eliminate the popular material used on buildings from Great American Ball Park to hundreds of suburban homes.

        “This has frightened the insurance industry sufficiently to push them into seeking the easy way out — excluding coverage relating to mold,” says Tom Klinedinst III, a Cincinnati account executive with USI Midwest, a major insurer for local construction firms.

        Underwriters anxious to prevent costly lawsuits are scrutinizing a product called “exterior insulation finish systems,” also known as synthetic stucco, made with a chemical compound, foam sheets and an acrylic finish.

        The problem is that the material traps and repels water equally well. If water seeps into the wall covering during construction, it's difficult to get out, creating a prime feeding ground for mold.

        Those exposed to toxic mold can suffer severe headaches, chronic fatigue, diarrhea, nose and throat irritation, and other cold-like symptoms.

        Other factors are alarming contractors, as well. Landmark court decisions in California and North Carolina have left synthetic-stucco builders vulnerable to construction-defect lawsuits. And many insurers facing a hefty bill from the Sept. 11 terrorist attacks are seeking to cut costs.

        “This has created kind of mob mentality on the part of the insurance carriers,” says Thomas Chatham, president of Cincinnati's O'Leary Kientz, an insurance consultant and risk manager.

        The result is that synthetic stucco contractors who manage to find or keep insurance likely will pay much higher premiums. Others who can't get coverage face an uncertain future. Homeowners who love the look may well have to find a substitute material or pay the higher cost for real stucco.

        It's unknown how many builders face canceled policies, but a large Cincinnati construction trade group received enough complaints from members that it held a meeting Thursday for contractors, insurers and other experts to discuss the budding crisis.

        “It is a big problem,” says Judy Short, executive director of Cincinnati-based Allied Construction Industries. If a contractor doesn't have liability insurance, he or she can't work, she said.

        Synthetic stucco is widely used in Greater Cincinnati. It's the nation's most popular commercial wall covering; one study says it's used on more than one in five new buildings.

        Contractors champion the material's light weight and durability. It's easy to install and less expensive than conventional stucco found on old Tudor-style homes in Cincinnati neighborhoods such as Paddock Hills. Conventional stucco — a mixture of cement, lime, sand and water — is rarely used on modern buildings in Cincinnati.

        Reputable construction firms that apply synthetic stucco in Greater Cincinnati have been notified about policy changes in recent months.

        Dennis Tasset, who owns a Cincinnati plastering company, scrambled for months to find an insurer to replace a policy that will be canceled Tuesday. He finally found a firm to cover his work, but he'll pay 20 percent more.

        He's luckier than most contractors.

        “They told me next year nobody will cover for mold,” Mr. Tasset says.

        Valley Interior Systems, one of the largest Cincinnati contractors specializing in this work, learned recently that it may have trouble renewing a policy. The firm installed synthetic stucco on many large, commercial projects such as Great American Ball Park and Glenway Crossing, a shopping center on the west side.

        “It's industrywide,” says Mike Strawser, vice president of Valley Interior. “We're signed up with our insurance carrier for another couple of years, but he has been making noise that it will be very difficult” to renew the policy.

        Other contractors have changed business plans.

        Oren Associates, a Huber Heights, Ohio, contractor that does some work in Greater Cincinnati, was forced to abandon lucrative residential jobs.

        “We can't depend on it as the biggest part of our business,” says Carol Davis, project manager for Oren Associates.

        The news of insurance woes has created a public relations problem for companies that make the material, says Stephan Klamke, executive director of Morrow, Ga.-based EIFS Industry Members Association, an industry trade group representing 380 manufacturers and distributors.

        Mr. Klamke acknowledges that it has been difficult for some contractors to secure coverage, but he says fault more often lies with a contractor's history, not the material.

        “The guys that are good succeed,” he says.

        Many Greater Cincinnati contractors agree that synthetic-stucco problems typically stem from installation. Improperly installing windows, insufficient caulking or faulty plumbing all have been known to dampen the material.

        Major manufacturers such as Dryvit have even redesigned their product to provide for better draining.

        Yet insurers tend to blame the material, not the workers. Contractors with otherwise spotless claims records are still facing insurance cancellation.

        “I've never had problems” related to mold or faux stucco, Mr. Tasset says.

        Insurers in the southeastern United States have been skeptical about the material for years.

        Problems surfaced in Wilmington, N.C., in 1995 when hundreds of custom-made homes began having problems with dampness. Reselling the homes became impossible unless contractors refinished the homes with other material.

        Greater Cincinnati's insurance woes could be a sign that the problem is spreading to the Midwest.

        Other contributing factors are the proliferation of mold lawsuits and claims. Mold's evils have attracted considerable attention since a Texas jury awarded a family $32 million in June 2001 and California environmental crusader Erin Brockovich filed a lawsuit claiming mold contamination in her Southern California home.

        Mr. Klamke pointed out that other exterior materials such as brick have moisture problems, too.

        Perry Bush Custom Homes, a Greater Cincinnati luxury home builder, has doggedly stuck with the material, building dozens of synthetic stucco-covered homes since 1990.

        But even Mr. Bush knows he must be careful.

        He uses just one trusted subcontractor. He makes sure homeowners understand the pros and cons of using the material, as well as their duty to keep up with interior caulking and other maintenance.

        It takes persistence to stick with synthetic stucco, but Mr. Bush says it's what his customers want.

        One Procter & Gamble employee purchased a Perry Bush-built home at River's Bend in Maineville only after the Cincinnati-based consumer goods giant relaxed a stand against synthetic stucco homes.

        The corporation normally guarantees it will purchase homes put on the market by key employees, a corporate perk it has refused to extend to synthetic stucco homes.

        Mr. Klamke's organization launched a “full-court press” to improve the material's reputation among insurers, corporations and consumers.

        Mr. Chatham, the Cincinnati insurance consultant, encourages reputable local contractors to negotiate coverage with their insurers. If that fails, firms should shop around for other providers.

        “It really is a problem,” he said

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