Does Homeowners Insurance Cover Mold?
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There is probably mold in nearly every household in the United States. Don’t think so? Check the grout in your bathtub.
While we live with small amounts of mold every day with no real negative effects, it can certainly destroy a home if it grows rampant. So it must be covered on your homeowner’s insurance policy, right?
Maybe…maybe not. As always, it is recommend that you read your homeowners insurance policy from front to back and ask your agent or insurer to explain everything you don’t understand, which may be half of it.
It’s better to spend two hours doing this once per year than suffering a financial loss that’s not covered by your policy.
There is very likely some mold coverage contained in your policy. But we can almost guarantee you there are restrictions on when mold is covered and to what dollar limit.
When Mold Is Covered
Most homeowner’s policies include some coverage for mold testing and remediation. But we’re not talking about your bathtub here…or the mold that grows underneath the water spigot in the backyard.
Specifically, mold coverage is only triggered on your policy when the mold is a DIRECT result of a “covered” water loss. Picture your water heater busting a pipe and spilling water onto the floor and walls in a closet.
The water damage described above is an example of “sudden and accidental discharge of water from a plumbing, heating or cooling system,” ABOVE the foundation of your home.
(Does flood insurance cover my basement against seepage?)
This is covered on most policies that are worth the paper they’re printed on. For the record, very basic home insurance policies may not contain this coverage. Again, ask your agent or read your policy for details.
When Mold MAY NOT Be Covered
The keyword in the section above is a “covered” water loss. For example, if you don’t have water seepage or foundation water damage coverage included on your policy (neither are automatically included in most cases), and you develop a mold from one of these “uncovered” water losses, you’re likely out of luck.
Also, if mold simply runs rampant in your home due to humidity, poor air circulation or bad housekeeping, you’re likely going to have to cover the cost of testing and remediation without the help of your insurance company.
Remember that insurance is generally designed to protect against accidents. While poor home maintenance is not a crime, insurers certainly aren’t going to pony up money for those of us who don’t keep our dwelling clean and tidy.
How Much Coverage Can I Expect?
You might see coverage limits for mold testing and remediation in the $1,000-$10,000 range on your current policy. And some policies simply state that they will pay the “reasonable” expense to test and remediate mold damage for a “covered” loss.
You might prefer the latter, as there is no set limit and you may have more leeway on the cost to repair the damage. An insurer who denied a claim would have a hard time explaining that their idea of “reasonable” was less than the cost to repair your damage if there were any serious disputes at claim time.
In some states, insurers are forced to offer mold coverage in limits that are derived from a percentage of the value of your home. For example, if your home is covered at $200,000, you can purchase 25%, or $50,000, worth of this valuable coverage. Limits of 50% and 100% may also be available.
Expect to pay through the nose for these options. They are typically very expensive and can add hundreds, or even thousands, of dollars in additional insurance premium to your current policy.
Additionally, you may have the option to purchase a stand-alone mold policy for your home. This is separate from your homeowner’s policy all together.
You may see premiums from a few hundred dollars up to as much as $25,000 for this policy, depending on where you live in the U.S. If your home is in a hot, steamy climate, you’ll be on the higher end of the scale. Of course, the size and value of your home also comes into play here.
Did we mention to ask your agent and read your policy yet? That’s really the best way to ensure you are comfortable with the coverage and limits of liability.