Is Mold Covered by Property Insurance?

4/5/2018 (Permalink)

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Homeowners insurance covers mold damage if it was caused by a "covered peril." Otherwise, an insurance company will likely not cover mold damage. There are exceptions, which we will get into later. Home insurance policies usually don't cover mold that resulted from a preventable water leak, flooding, or high humidity.

Home insurance covers mold if a "covered peril" caused the mold. In that case, your home insurance policy will likely pay for repairs and clean-up.

Here are some of home insurance's covered perils:

• Fire
• Lightning
• Vandalism or malicious mischief
• Damage caused by vehicles
• Theft
• Falling objects
• Weight of ice, snow, or sleet
• Accidental discharge or overflow of water or steam from plumbing, heating, air conditioners, sprinkler systems, or household appliances
• Frozen pipes

Let's take a look at some real world examples. When home insurance will likely cover you:

• An ice dam forms in a roof gutter during a rough winter and water backs up under your shingles. The water leaks into your attic, soaks your attic floor and insulation, and creates mold.
• A pipe bursts in your home and dumps gallons of water on the floor and saturates drywall while you're at work. Mold begins to form before you call.
• A washer hose springs a leak and damages behind your washer. The washer hose isn't old, you stop the leak, and report the damage immediately, but not before mold forms.

These are "sudden and accidental" incidents. Insurance companies typically cover this type of damage. In fact, non-weather-related water damage is one of the most common home insurance claims and one of the most expensive.

When home insurance will likely NOT cover you:

Your basement pipes freeze and burst. You don't notice it for a few weeks. Now, you have a few inches of water on your floor and mold growing. 

Broken shingles on your 40-year-old roof allows water into the attic. Water saturates wood and insulation and leads to mold in the attic.

Mold forms in your shower. You don't think much about it until one day you notice that it's really unsightly and you're concerned about whether it's making your family sick.

In these cases, an insurer will likely not cover the damage. Why? An insurance company expects you to take care of your house. That means properly ventilating the bathroom, replacing an old roof, and checking your basement regularly.  An important reason to stay on top of home maintenance.

Also, the standard homeowners insurance policy does not cover water damage caused by a flood.  Thus if a flood causes water damage that leads to mold, the resulting mold issue would not be covered by your home policy. 

A separate flood policy, will cover mold and mildew, as long as it’s not caused by the homeowner’s failure to inspect and maintain the property after the flood.  That means, once you can get back into your home, you need to start trying to clean up and keep mold from growing or spreading. 

How do I know if my home insurance policy covers mold?

As mentioned earlier, home insurance companies usually don't cover mold damage unless it's directly related to a "covered peril." The good news -- there are exceptions.

Check your homeowners insurance policy to see if there is any language about mold claims. Some insurers offer limited coverage for mold claims. This may mean limiting how much the insurer will pay for a mold-related claim. Or an insurer may increase the cost of a home insurance policy if you have mold-related coverage.

If you don't have mold coverage, you can buy an endorsement to your insurance policy that adds mold coverage. An endorsement is when an insurance company adds additional coverage to a regular home insurance policy, for an additional fee.