Navigating the Complexities of Mold Coverage

Mold, and the remediation of mold, continues to be one of the hottest topics in our industry. Why? Mold has been around forever. It is not a new problem. However, it is vital to review how personal insurance carriers are handling mold claims, and what exclusions and sub-limits they are applying within their contract wording.

First and foremost, the majority of homeowners’ policies contain an exclusion for damage caused by mold, fungi and bacteria. However, it is possible that your homeowners’ policy may pay for some, or all, of your mold damage if the loss is due to a covered peril as a result of a sudden and accidental event (i.e. a burst pipe). Since this was a sudden and accidental loss, and the pipe burst was the proximate cause of the mold, a homeowners’ policy will typically provide coverage for the remediation of mold up to the policy sub-limit less your policy deductible.

At the same time, if the basement of your home consistently has mold due to just being damp, or the mold is caused by water seeping into the basement, the cost to remediate the mold would not typically be covered because it is not sudden and accidental. Another example of a situation where the remediation of mold may not be covered by a standard homeowners’ policy would be mold caused by a flood (inundation of surface water). Since flooding is not a covered peril under a standard home policy, the problem of mold similarly would be excluded.

Most standard insurance carriers now include a sub-limit for mold remediation due to a covered loss on their policies. The coverage limit differs greatly by insurance carrier and by state. Many carriers offer the ability to increase this limit for an additional premium depending on a number of factors. In many instances, the request to increase a mold sub-limit will need to go through an underwriting approval process especially if the residence has suffered a past water damage claim.

Additional next steps include the importance of reviewing your homeowners’ policy to see what, if any, mold sub-limit may be on your policy. Discuss the sub-limit with your agent to see what additional coverage may be available to you and at what price. If additional coverage is available for a covered loss, and considering the cost to remediate mold in today’s market, we strongly recommend increasing the sub-limit if available.

Additionally, you can take these important steps to help prevent the growth of mold:

• Regular maintenance of your home including cleaning gutters and checking for roof leaks.
• Check hoses and fittings on all appliances.
• Immediately remove sheetrock, insulation, carpeting and padding if a water loss does occur and dry out the affected area as soon as possible.

AssuredPartners Personal Insurance experts can provide guidance with insurance carrier options, contract language, services and navigating the personal insurance marketplace. To learn more, visit AssuredPartners Personal Insurance.