Does Homeowners Insurance Cover Mold?

Homeowners insurance is designed to protect you from a variety of perils, but you might be wondering if mold is one of them. It's an excellent thing to ask, especially if you're buying an older house and want to avoid any unexpected costs. The solution isn't always obvious. According to Sean Harper, CEO and co-founder of Kin, a Chicago-based insurtech business, “standard homeowners insurance policy can cover mold to an extent.” “It depends on what created the mold,” says the expert.

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Here are some of the most prevalent scenarios when mold may or may not be covered by homeowner's insurance.

TAKEAWAYS IMPORTANT

• Your homeowners insurance policy does not guarantee mold coverage.
• Mold damage is usually only covered if it is caused by a covered risk.
• Flood-related mold damage would necessitate the purchase of a separate flood insurance policy.
• Preventative actions can help reduce the likelihood of needing to deal with a mold problem.

Mold and Covered Perils Insurance

Homeowners insurance policies specify a list of "covered perils," or instances of property damage for which you can file a claim. Because water seeping into the structure of your home is the most common source of mold growth, you should know which water-related covered risks are included in your policy.

For instance, if mold develops as a result of any of the following, your coverage may cover you:

• Water leaks as a result of an item that isn't working properly
• A burst hot water heater has resulted in water damage.
• Firefighters extinguishing a fire in your home cause water damage.

Mold would be considered “resulting damage” from a covered risk in these cases. It's critical to understand the difference between subsequent and initial damage. If your water heater breaks and a leak causes mold to grow in the walls, your policy may cover the cost of repairing the walls and removing the mold, but not the cost of replacing the hot water heater.

It's crucial to keep in mind that the amount your insurance may pay for mold removal and remediation may not cover the full extent of the damage. “Typically, mold coverage is limited—for example, a company may cap mold removal and cleanup at $10,000 for a single occurrence,” says Pat Howard, a Policygenius homeowner's insurance specialist. Higher coverage limits may be available, but if you're not sure what's covered, Howard recommends speaking with your agent to learn about your alternatives.

Floods or natural disasters can lead to mold growth.

Mold can form as a result of water damage caused by external causes in some circumstances. If your homes insurance covers mold, it depends on what caused the damage in the first place.

“Mold caused by storm surges, such as flooding, is typically not covered by regular homeowners insurance,” Harper explains. “This is because conventional home insurance policies do not cover flood damage; you must purchase flood insurance.”

If you have flood insurance and your home gets flooded as a result of strong rains, a storm, or another natural disaster, your policy may cover mold removal and flood-related repairs. In addition to your standard homeowners insurance premium, flood insurance costs roughly $700 per year on average, though it may cost more if you live in a flood-prone location. 

If you're worried about mold after a flood, however, it might be worth the expense. According to the Federal Emergency Management Agency (FEMA), just one inch of water in your home can cause $25,000 in damage. Flood insurance that includes mold coverage may be able to help cover part of the costs.

Mold caused by natural disasters such as hurricanes or ice storms may be covered by your homeowners insurance policy. For example, if a hurricane breaks your roof off and water leaks into your home, causing mold to grow, you may be able to file a claim for that as well as other home damages.

Mold As A Result Of Negligence

The third type of mold-related damage is caused by the homeowner's irresponsibility. In layman's terms, this involves disregarding home maintenance or repairs to the point of allowing mold to grow. “Mold that grows as a result of negligence or lack of upkeep is often not covered by your homeowners insurance policy,” Howard explains. “If you could have avoided the mold by repairing leaky pipes or using a dehumidifier, your insurance company will not pay for mold removal and remediation.”

Assume you observe water leaking from the seal around the base of your toilet. You let the leak continue instead of fixing the seal or the toilet, causing damage to the subflooring. Mold grows from there, spreading to the baseboards and walls. In that case, your homes insurance claim can be refused since you might have prevented the mold from growing.

How to Get Your Mold Damage Claim Approved

There are various things you can take to avoid mold and/or increase your chances of getting your mold damage claim granted.

On the front end of prevention, you can:

• Dehumidifiers should be installed in locations that are prone to moisture.
• Check plumbing pipes and fittings for leaks on a regular basis.
• Provide adequate ventilation in bathrooms, laundry rooms, kitchens, and other areas of your home where mold could form.
• In the winter, keep gutters clean to avoid ice jams, which can lead to leaks.
• Inspect your roof—as well as the area surrounding windows and doors—on a regular basis, and caulk any cracks that could allow water to pour in.
• In order to minimize breakages or leaks, properly insulate internal and external pipes throughout the winter.
• Check appliances and hot water heaters for leaks on a regular basis.

If you need to make a mold damage claim, follow these steps:

• Take photos and/or video of the damage to properly document it.
• If you have them, provide up-to-date maintenance records.
• To process the claim, follow any and all directions given by the insurance company.
• To clear up the mess, use a mold removal company that has been approved.

What Should You Do If Your Mold Claim Is Turned Down?

If your homes insurance company refuses your mold claim, you should seek a second evaluation from a competent contractor to determine what caused the damage. If your insurance company offers an appeals mechanism, you could try to appeal the refusal with them. If not, your state insurance commissioner might be able to advise you on how to get the claim approved or file a denial complaint.