Homeowner’s Insurance & Mold Coverage

Mold strikes fear into the hearts of those who have heard horror stories about toxic mold, expensive mold remediation, and denied homeowner’s insurance claims. Yet mold can be found anywhere, including in most homes. Mold needs moisture to thrive and problems can arise for homeowners when the presence of persistent moisture goes undetected or unresolved, leading to widespread mold growth. Moisture can result from high indoor humidity, flooding, or a leaky roof or dishwasher. Whether mold damage is covered by homeowner’s insurance often comes down to the source of that moisture. Whether mold is covered by homeowner’s insurance often comes down to the source of moisture and the wording of a policy. So, when you undertake your annual policy review be careful to check-out the language of your policy as it pertains to water damage. Look for mold exclusions or limitations and call your agent if the wording is unclear. While most basic homeowner’s insurance policies exclude coverage of damage caused by mold, fungi, and bacteria, it does not mean a mold claim will be denied automatically. In most cases, if mold results from a sudden and accidental covered peril, such as a pipe bursting, the cost of remediation will typically be covered. That's because technically the pipe burst is the reason for the claim, not the mold itself. Claims are more likely to be rejected if mold is caused by neglected home maintenance, long-term exposure to humidity, or repeated water leaks and seepage. It's hard to put a precise dollar figure on mold damage because most insurers don't separate mold claims from water-damage but approximately 22% of all homeowners insurance claims result from water damage and freezing, a category that includes mold remediation. The cost of the average mold claim? The answer is that it is now between $15,000 and $30,000 … approximately five times the average non-mold homeowner’s claim. Another issue you should be aware of is that most policies won't cover mold related to flood damage. For that, homeowners need separate flood insurance which averages $540 per year through the National Flood Insurance Program (http://www.floodsmart.gov). Is extra mold coverage necessary if it is available to you? It might be possible to purchase a mold rider as an add-on to your existing homeowner’s policy so if you are interested, ask your agent. Premiums will vary based on where you live and the value of your house. You could pay from $500 to $1,500 a year for a rider on an existing policy and prices tend to climb in humid southern climates, and in Texas and California, where there have been high-profile mold cases. Cost and your personal risk-tolerance are the driving factors behind a decision. In general, older homes in humid climates where mold thrives will be more costly to insure than newer constructions in a dry climate. In particular, homes built within the past five years are likely constructed with mold-resistant wood, drywall, and paints. Newer homes are also less susceptible to water infiltration. If your insurance carrier isn't willing to provide a rider because the risk is too great, specialty companies such as Unitrin might sell you a stand-alone mold policy. Brace yourself for a hefty price tag. Annual premiums for a stand-alone mold policy might range from $5,000 to $25,000. Weigh the cost against risk factors including the age and value of your home, its construction, and the prevalence of mold issues in your area. Short of paying more for a rider or a separate policy, moisture prevention then becomes the key. The surest way to avoid having a claim denied is keeping mold at bay in the first place. Preventing and eliminating mold when it does occur are critical to protecting the value of your home. To help prevent mold growth in your home, you might consider the following steps: •Lower indoor humidity with air conditioners, dehumidifiers, and exhaust fans. •Inspect hoses and fittings on appliances, sinks, and toilets. •Use household cleaners with mold-killing ingredients like bleach. •Opt for paints and primers that contain mold inhibitors. •Clean gutters to avoid overflow and periodically check the roof for leaks. •Avoid carpet in wet areas like basements and bathrooms. •Remove and dry carpet, padding, and upholstery within 48 hours of flooding. Should you have any questions on what I have discussed or would like to have a conversation with an insurance agent who I have great trust in, you might want to contact Scott Benjamin from Partners of the West Insurance Services, LLC. Scott was instrumental in helping me with my insurance articles and has assisted many of my clients with all of their insurance needs. Scott may be reached at 858-336-1325.

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