Does Homeowners Insurance Cover Mold Damage?

Mold is everywhere. It is also very expensive to remediate depending upon the extent of damage. Many homeowners make the mistake of assuming that mold damage would be covered on their homeowners policies. Typically, mold is one of those excluded events named in your policy along with fungus, wet rot, dry rot, bacteria, floods and earthquakes. There may be other exclusions so be sure to read your policy or ask your insurance agent to clarify any questions you have.

When is mold covered under my homeowners policy?

As you may have guessed, mold damage is typically only covered if it occurred due to a covered "water event". Typical covered water events include water pipe freezing, internal water plumbing leaks (not due to negligence), water entering your home due to external damage, etc. Insurance polices are fairly specific about what types of water damage are covered.

It is very important to document and take pictures of ANY water related damage to your home when it occurs. Especially if the damage itself is covered under your homeowners policy and you decide the damage is enough to make a claim. Take photos of the damage, note the date and time the damage occurred and be sure to be clear where it occurred. Keep these pictures with any insurance documentation you have regarding your claim for covered water damage to your home. It is VERY important to notify the insurance company as soon as the water damage occurs and document that you have notified them of your intent to make a claim. This is one of the most likely defenses that an insurance company will make in order to not pay for mold damage. Make sure that any delay is due to them and not you.

The main reason you want to keep this information is in case any mold begins to form in the area of this previous damage. You may get the damage repaired as part of your homeowners insurance coverage, however, a mold problem could still appear weeks or months later in that same area. Mold spores are very hearty and have a tendency to stick around. If you can prove that any subsequent mold damage was due to the original water event, then you may be able to include any testing and remediation work as a part of the original claim. Not only would it possibly be covered, but it would still only count as one claim against your policy and rates. Be sure to check your CLUE report later on to ensure that both 'events' were only counted as one.

When is mold NOT covered under my homeowners policy?

Mold damage would typically not be covered following excluded water events. Excluded water events are typically due to flooding caused by excessive rains or hurricanes (unless you have a specific windstorm rider on your policy). Other events or conditions that may not be covered are water seepage and foundation water damage, high humidity and general lack of home maintenance situations whereby a lack of home cleanliness contributed to the mold damage.

There may be extra coverage options for some of these excluded water events such as flood insurance and windstorm coverage but you will have to ask for this additional coverage from your current insurance company or shop around for coverage from competing insurance companies to see which has the best rate for these extra coverage options.

How much will insurance companies typically pay for mold damage?

Most policies state a specific limit on what they will cover for mold testing and remediation. This is typically up to $10,000 and only if the mold occurred due to a covered water event. Some policies only state that a reasonable reimbursement will be made which is more subjective. As long as you have proof that the damage was due to a covered water event (see previous comment about documenting damage), then it would be hard for an insurance company to deny your claim.

Some states require insurance companies to offer mold insurance coverage up to a certain percentage of the value of the home. These separate mold policies can be very expensive so be sure to weigh the risk versus the cost of the coverage.

This should not be considered financial advice which can only be given by a qualified financial or insurance professional. We suggest you consult with a licensed financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium and coverage due to water and mold damage, some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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