How can I get Mold Insurance?

Dale Marshall

Mold insurance isn’t a separate type of insurance product you can buy, but some companies offer special "mold riders" to go along with homeowner’s or renter’s insurance policies. These riders, though, can be costly, but may provide only limited benefits when triggered. However, most homeowners and renters who take reasonable steps to prevent the conditions that lead to mold growth, and who take action promptly when a hazard occurs that might generate mold growth, will find that their existing policies will provide some level of benefits to deal with mold.

An inspector can assess which types of mold are present at a house or business.
An inspector can assess which types of mold are present at a house or business.

Mold insurance has been a hot topic for homeowners, renters and insurance companies in the United States ever since 2001, when a Texas couple won a $32 million lawsuit for a number of charges related to their insurance company’s failure to deal with mold damage properly. Ever since, homeowners and renters have sought to guarantee mold coverage, while insurance companies have tried to minimize their liability in cases involving mold. The fact is, though, that most homeowners’ and renters’ insurance policies will provide minimal to moderate mold coverage, designed primarily to remove it and repair any damage it may have caused. In other words, if you have a homeowner’s or a renter’s insurance policy, it’s likely that under normal circumstances, you have some level of mold insurance.

Water mold often forms after a flooding event.
Water mold often forms after a flooding event.

Molds are fungi that exist naturally in any environment. Most are benign; some molds, indeed, are beneficial — penicillin is derived from the same type of mold that attacks bread. Others, though, can be harmful, damaging their hosts and causing health problems for humans who come in contact with them. Molds grow best in areas of relatively high warmth and humidity, such as behind walls where moisture is entering through cracks or from dripping pipes. The Texas lawsuit involved the spread of a harmful mold from a relatively small area in a single room to a point where it had effectively taken over every one of the mansion’s 22 rooms, adversely affecting the couple’s health and rendering their home uninhabitable.

Before the Texas lawsuit, most insurance claims arising from mold were settled for relatively minor amounts — the average was under $5,000. They primarily covered the cost of mold remediation — that is, destroying the mold and cleaning it up, and repairing any damage it caused. Since then, though, the cost of mold claims has risen dramatically to over $30,000, driving up premium costs significantly and driving insurance companies to try to exclude coverage for mold from the policies they issue.

Most insurance policies either list specific hazards they’ll cover, automatically excluding all others, or will cover “all hazards” except for a list of specific exclusions. Whenever exclusions are listed, mold will appear prominently, and mold will never be included in a list of covered hazards. Nevertheless, most insurance policies will cover damage from water, whether from a plumbing problem, inclement weather or firefighting efforts. Preventing the growth of mold, or destroying any mold that’s grown due to such incidents, is an essential element of dealing with water damage.

There are several things to remember about filing an insurance claim for mold, which should inform your efforts to obtain mold insurance — or ascertain the level you already have. First, the faster you act when water damage occurs, the likelier it is you’ll prevent a mold outbreak. If mold has been growing undetected for a while, such as when you discover a dripping plumbing joint behind your walls, you must likewise move quickly to ameliorate the damage and the potential health hazards, making certain to document everything you do thoroughly. It is important that you not diagnose a problem yourself — do not characterize a claim as a mold claim; simply tell your insurance agent about the event that started the problem, such as a water leak.

If mold has been growing undetected, you have to move quickly to eradicate the problem.
If mold has been growing undetected, you have to move quickly to eradicate the problem.

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