Every IICRC-certified water damage restoration contractor knows Category 3 water is classified as Category 3 because it is grossly contaminated with fungi, bacteria or other pollutants. However what no one seems to know - especially insurance agents/brokers and claims adjusters - is that universal exclusions in property and liability insurance policies for losses “related to” fungus/bacteria automatically apply to Category 3 water losses. Insurance coverage gaps for losses associated with Category 3 water must be filled using the same risk mangement tools and environmental insurance products created for fungi/mold risks in 2003.
If a restoration job involves the clean-up or assessment of a minute quantity of Category 3 water, any loss arising from the job site - like a fire caused by the contractor - can be excluded through the effects of universal fungi/bacteria exclusion in insurance policies. Even carpet cleaners are running completely bare on a job where a single speck of Category 3 water was cleaned up.