Does Homeowners Insurance Cover Mold?

Mold is a problem that no homeowner wants to deal with. Unfortunately, home insurance only covers mold under rare circumstances, and even then, you have to carefully manage and document the outbreak. Here are key things every homeowner should know about how insurance covers mold outbreaks and how to file a claim.

When does homeowners insurance cover mold damage?

Mold is often a byproduct of water damage, and homeowners insurance only covers water and mold damage on a limited basis when it’s the result of a covered peril. For example, homeowners insurance typically does cover mold damage when:

• Mold forms near a burst pipe or ruptured water heater
• It forms in areas where water was used to suppress a fire
• Water enters your home through an opening created by a fallen tree or other object

To put it another way, home insurance generally only covers mold that results from incidents that are sudden, accidental and otherwise not excluded by your policy.

Homeowners insurance does not cover mold outbreaks resulting from gradual conditions or a lack of upkeep.

If your mold outbreak originates near a pipe that's been leaking for several weeks or under a carpet in a damp basement, homeowners insurance is not likely to cover your cleanup costs.

Additional insurance protection for mold damage

Although standard homeowners insurance generally excludes sewer and drain backups, slow leaks and floods, additional insurance is available to cover mold and other damage resulting from these specific risks.

• Water back-up endorsement: Most home insurers offer an endorsement that covers sewer and drainage backups. These typically cover the costs of cleaning, drying and removing mold from floors, walls and other surfaces damaged by reverse flows, sump-pump failures and other backups, unless the backup occurs during a flood.
• Hidden-water endorsement: Though not as widely available as water-backup endorsements, hidden-water endorsements cover damage from undetected leaks in pipes or appliances.
• Flood insurance: Home insurance, with or without a water backup endorsement, excludes flood damage. However, flood insurance does cover the costs of cleaning mold resulting from a flood.

A water back-up endorsement typically adds about $5 to $15 a month to a homeowners insurance policy, and a hidden-water endorsement, when available, costs a similar amount. The average cost of NFIP flood insurance is $64 a month nationwide.

How does homeowners insurance cover mold damage?

When mold damage results from a covered peril, homeowners insurance typically includes a sublimit, often about $25,000, for expenses related to mold and rot removal.

Mold and rot removal coverage typically applies to the following expenses:

• Cleaning and/or replacing mold-damaged floors, walls and other surfaces.
• Testing for the presence of additional mold and other microbes.
• Additional living expenses or lost rent, if your home is uninhabitable during cleanup.

The sublimit for mold and rot removal typically does not apply to losses and/or expenses related to the covered peril that precedes a mold outbreak.

For example, if a tree falls onto your house, your policy’s normal dwelling, personal property and loss of use limits apply to damage caused by the tree itself. The mold and rot removal sublimit only applies to mold damage that may occur after the tree falls.

How do I file a mold damage claim?

One of the first things you need to do for any homeowners insurance claim, including one involving potential mold, is to protect your home from further damage. This includes sealing off broken windows or other openings with a tarp, plywood or other covering as soon as it is safe to do so, and removing items in damaged areas from harm’s way.

You also need to notify your insurance company of the damage at the earliest opportunity, in order for them to send an adjuster out to assess the damage.

It may take up to 48 hours for signs of mold to become apparent, but it’s important to take photos of the damage right away. Having photos showing the condition of your home immediately after a covered peril strikes and the steps you have taken to prevent further damage helps document the validity of your claim.

If you’re not sure if your mold damage is eligible for coverage, it’s best to tell your insurance agent or claims representative that you are only “inquiring” about a mold damage claim. This gives you a chance to find out what may or may not be covered before you formally open a claim.

Once you open any home insurance claim, it is entered into the Comprehensive Loss Underwriting Exchange (CLUE) record for your home, even if you don’t receive an insurance payment. The presence of a mold claim in the CLUE database may make insurance companies think twice about insuring your home in the future, or charge a higher rate.

If the insurance company’s settlement offer is too low, you can request arbitration. In arbitration, you and the insurance company each present details of your claim to an “umpire.” If you need help preparing your case for arbitration, consider hiring a public adjuster or attorney.

How can I prevent mold outbreaks in my home?

Since mold poses potential health risks, can be costly to clean up and is rarely covered by insurance, it’s best to prevent mold from forming anywhere in your home in the first place.

Mold thrives in damp conditions and feeds on cellulose materials in wood, drywall and many types of ceiling tiles. Here are common tips for preventing potential mold outbreaks:

• Avoid keeping carpets in basements, bathrooms and other wet areas.
• Maintain your roof and clear moss off it to prevent water from getting into your home.
• Allow air to circulate freely throughout all the rooms in your home.
• Consider dehumidifiers to keep the humidity level in your home between 30% and 60%.
• Use exhaust fans in your kitchen and bathroom.
• Use bleach and other mold-killing products to clean bathrooms and other areas. Just make sure to heed each product’s safety warnings and never mix chlorine with ammonia.
• Regularly inspect pipes, hoses and fittings for leaks and replace them when they show signs of wear.
• Clear leaves and other debris from your rain gutters.
• When cleaning mold, wear an N95 mask and gloves to minimize your contact with spores.

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