By: Gwen Moran
Published: April 15, 2010
Whether mold is covered by homeowners insurance often comes down to the source of moisture and the wording of a policy.
Mold strikes fear into the hearts of those who’ve heard horror stories about toxic mold, expensive mold remediation, and denied homeowners insurance claims. Yet mold can be found anywhere, including in most homes. It’s usually harmless.
Mold needs moisture to thrive. Problems can arise for homeowners when the presence of persistent moisture goes undetected or unresolved, leading to widespread mold growth. Moisture can result from high indoor humidity, flooding, or a leaky roof or dishwasher.
Whether mold damage is covered by homeowners insurance often comes down to the source of that moisture. Take an hour or two to review the language of your policy, especially as it pertains to water damage. Look for mold exclusions or limitations. Call your agent if the wording is unclear.
Mold needs moisture to thrive. Problems can arise for homeowners when the presence of persistent moisture goes undetected or unresolved, leading to widespread mold growth. Moisture can result from high indoor humidity, flooding, or a leaky roof or dishwasher.
Whether mold damage is covered by homeowners insurance often comes down to the source of that moisture. Take an hour or two to review the language of your policy, especially as it pertains to water damage. Look for mold exclusions or limitations. Call your agent if the wording is unclear.
Home insurance and mold
Most basic homeowners insurance policies exclude coverage of damage caused by mold, fungi, and bacteria, says Mark Ferguson, property claim specialist with General Casualty Insurance in Sun Prairie, Wis. Yet that doesn’t mean a mold claim will be denied automatically.
In most cases, if mold results from a sudden and accidental covered peril, such as a pipe bursting, the cost of remediation should be covered, says Ferguson. That’s because technically the pipe burst is the reason for the claim, not the mold itself. Claims are more likely to be rejected if mold is caused by neglected home maintenance: long-term exposure to humidity, or repeated water leaks and seepage.
It’s hard to put a precise dollar figure on mold damage because most insurers don’t separate mold claims from water-damage claims, says Claire Wilkinson of the Insurance Information Institute. About 22% of all homeowners insurance claims result from “water damage and freezing,” a category that includes mold remediation, according to the III. A 2003 white paper on mold from the III put the cost of the average mold claim between $15,000 and $30,000, at least five times the average non-mold homeowners claim at that time.
After a rush of mold claims in the early 2000s, most states adopted limitations on mold coverage. Amounts vary, but a typical homeowners policy might cover between $1,000 and $10,000 in mold remediation and repair, says Celia Santana of Personal Risk Management Solutions in New York. Most policies won’t cover mold related to flood damage. For that, homeowners need separate flood insurance, which averages $540 per year through the National Flood Insurance Program.
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