Misconceptions and confusion surround mold and insurance claims. After all, sometimes insurance companies cover mold; other times they don’t. Many insurance companies specifically exclude mold from their policies while others will sell you additional coverage. To make it even more confusing, some states, such as Illinois, specify under what circumstances the insurance company must cover mold. So, what’s the scoop with your home’s mold issues? Will your insurance company cover it or are you on your own? Let’s explore insurance and mold in greater detail.
First, mold isn’t a new problem. Mold has been around for eons. It is everywhere. In recent years, mold has become more of a concern thanks to scientific and medical discoveries about its health hazards. As public awareness has grown, the number of mold claims has risen, causing insurance companies to revisit the way they handle mold claims (often specifically excluding mold coverage or severely limiting coverage).
In general, insurance companies will not pay for mold damage related to home maintenance (or a lack thereof). For example, if water has been seeping into your living room because of poor drainage, the insurance company isn’t likely going to pay. Likewise, if mold overtakes your bathroom because the bathroom is poorly ventilated, you’re probably on your own. Remember, insurance coverage is designed to protect your home from sudden, unexpected losses, not serve as a substitute for routine maintenance.
Flooding and the mold that inevitably follow a flood event are certainly sudden and unexpected. However, because most homeowner’s insurance policies specifically exclude floods, the resulting mold damage is also not covered. If you have a national flood insurance policy, resulting mold may be covered, but the ultimate decisions are made on a case-by-case basis. Mold mitigation steps taken after a flood event are usually covered by the national flood insurance policy if reasonable and appropriate.
Now, what about mold that is the result of water damage from a covered insurance event such as a burst pipe? Will insurance pay for mold damage in these cases? Maybe yes, maybe no. The answer to this depends on your insurance policy. Many insurance policies now specifically exclude or limit the coverage for mold that has resulted from a covered water loss. Take a look at your homeowner’s insurance policy and all endorsements to find out if your insurance policy specifically excludes mold, even mold that originates from a covered loss. Typical insurance policy mold exclusions include:
- Exclusions for all mold-related damages
- Exclusions for all mold-related damages with an option to buy an endorsement at an additional cost
- Limits on how much mold damage the insurance company will cover and under what circumstances
- Limits on what type of mold expenses the insurance company. For example, the insurance company may be willing to pay for mold clean up but not for complete mold mitigation and restoration.
No one understands your insurance policy better than your insurance agent and a public insurance adjuster. Ask your insurance agent to explain anything that you do not understand about your homeowner’s insurance policy and mold coverage. It may also be worthwhile, especially if you have extensive water and mold damage, to hire a public insurance adjuster to negotiate your claim directly with the insurance company.
In addition to evaluating your insurance policy for mold coverage, check with your state’s department of insurance to see if your state mandates mold coverage under any circumstances. Each state regulates insurance, with laws varying by state. For example, in Illinois, if your mold is the result of water damage that originated during a covered fire or lightning loss, the mold damage is covered (all damages are subject to the policy limits). Some states are considering mandating that insurance companies cover at least a minimum amount of mold damage so make sure to check with your state’s department of insurance to find out the latest regulations, if any, covering your insurance company’s responsibilities.
Insurance and mold – are you covered? Consider first how the mold originated. If the mold occurred due to a covered water loss, it may, or may not, be covered. Check with your insurance agent as well as the state’s department of insurance to get a better sense of the insurance company’s obligation to you.
