Most insurance companies have mold exclusions on their policies. For example, if you purchased a home and later down the road you found some old mold growth in your home that has been there for some time, you will most likely not be covered by insurance. They will cover any active or very recent water damage known in the industry as a “common peril” that leads to mold growth as long as you report the claim quickly, which I will explain in this article.
When is mold damage covered? – According to the Texas Department of Insurance, “most home policies cover sudden and accidental water damage. Examples would include a burst pipe, toilet overflow, or broken washer hose. If mold develops on a damaged item, it would be covered.
When is it not covered? – Most home policies don’t cover water damage from gradual leaks or seepage, and that includes damage from mold. Mold from a flood would not be covered because home policies don’t cover floods. You would need a separate flood policy.
Adding coverage – Most home policies don’t include mold cleanup and testing after a damaged item is removed. Your insurance company may let you add coverage for cleanup caused by a covered loss. Your agent can tell you what options are available.
Your next question may be, why don’t they cover mold damage? The answer is simple – money and profits!
You see, insurance companies are in the business to make money for the executives and their shareholders. The fewer claims they have to cover and the less money they have to payout, the more profits they make for their bottom line.
In my experience over the last decade is the way they make more money is by excluding and denying as many claims in their policies as they can get away with. This is exactly why people who live in flood or forest fire zones cannot get insurance, or if they do, it is costly to the point of being unaffordable. The reason is that the insurance companies know that these people will most likely experience a flood or fire, and to protect their profits and stay in business, they say no insurance for you – tough luck!
Now think of the current global mold epidemic is more along the lines of a biblical plague infecting approximately 50% or more of the U.S. residential properties and about 85% or more of the commercial properties. It’s as if the whole country is in a mold zone, and the facts are that the insurance companies would go out of business if they were to cover all the mold damage.
The insurance companies know this, so they often exclude or limit mold damage coverage to protect their business and profits. But as I mentioned above, there is hope for some of you because they will cover any active emergency or very recent water damage that leads to mold growth.
The Mold Damage Must Be Caused By a Common Peril (Emergency Leak)
The only way that you will most likely be covered is if the mold growth in your home was caused by what is called a “common peril.”
This would be emergency-type water damage situations such as clogged main drain that overflows in the house, leaky water heaters, and or a busted pipe, to name a few. If these water damage events cause mold growth and you report the claim within two weeks or less, you should be 100% covered because the growth resulted from a common peril – i.e.: active water damage.
Please keep in mind that you have two weeks from the date of the incident to report the claim here in the state of California. If you wait 3 or 4 weeks, then this may not be covered because you waited too long, and the mold growth they may claim is due to homeowner negligence for not taking care of the problem quicker.
According to the insurance company Esurance, they will cover:
“Water damage, on the other hand, involves instances of water hitting your home before touching the outside ground — and is usually covered by homeowner’s insurance. Depending on your home policy, things like a roof leak, busted pipe, faulty sump pump, or other plumbing issues, could all qualify.”
What they mean by saying that “the water damage must be from water hitting your home before touching the outside ground” is that they will not cover flooding from the outside. This would fall under flood insurance and would probably not be covered by your policy.
Please note that if your mold growth was caused by water damage that was caused by a maintenance problem and or neglect, then it will not be covered.
As a homeowner, the insurance company expects you to inspect and maintain the home regularly. An example of poor maintenance would be a leaky pipe under the sink that you let sit there for a while or a roof leak that has been there for months or years.
With that said, any mold growth that had occurred because of an apparent existing leak that you let sit there for an extended period of time or if you have other maintenance issues such as extreme humidity or recurring drainage problems, you may be out of luck because it is not considered a “common peril” and would be the result of poor maintenance.
Get Ready for a Fight!
Regardless of how the leak happened and even if you think it is a common peril situation, you will most likely have to fight with your insurance company to get anything paid for and the damage fixed. I have seen this happen numerous times.
For example, this happened to a recent client of ours who had a leak in the refrigerator water dispenser. Unbeknownst to him, the leak had been there for quite some time, and his kitchen floor and walls around the fridge were covered in mold. As soon as he found the leak, he called his insurance company and they sent out an adjuster who saw the leak was pre-existing, and he said it was not a common peril (emergency), but was the result of poor maintenance.
He fought tooth and nail for a couple of weeks against his insurance company to get help. All the while, he and his family were left in the home with toxic mold. Eventually, the insurance company gave in and paid to cover the damage.
Please keep in mind that my client had insurance with this company for over 30 years, and in that time, he never filed one claim. He says he has paid them tens of thousands of dollars. To thank him for being such a great customer for so many decades, they tried to raise his rates considerably the next time he went to renew. He said, screw you greedy bastards and went with another property insurance company out of spite.
Unfortunately, now his son now suffers from health issues due to the toxic mold exposure from a simple leak in the refrigerator water dispenser. It is sad because I see this happen all the time, and it is simply done just so some greedy insurance companies and their slimy executives can profit off people’s misery as they laugh all the way to the bank.
After all, this is America, the land of greed where often profits come before people, health, and integrity.
Do You Need Help?
Our company Mold Safe Solutions puts people and integrity before profits. We have also been through mold damage and health issues from toxic mold exposure ourselves, so we know how frustrating and scary this experience can be.
If you have any questions about dealing with insurance and water and mold damage or you need help dealing with your insurance company, please call us anytime at 760-818-6830 or contact us online at this link.
Moe Bedard is the founder and CEO of Mold Safe Solutions. A full-service Indoor Air Quality (IAQ) company specializing in property water damage, mold inspections, consultations, and mold remediation. If you need help with a project, please call Mold Safe Solutions at 760-818-6830.