Archive for the ‘Home Insurance’ Category

In recent years people have become quite scared of the prospect of having mold in their homes. Some home loans cannot even be approved if mold is detected on a property, and there are a lot of horror stories floating around about homeowner’s insurance policies refusing to pay out on mold claims and the high expense of repairing mold damage once it sets in.

Take for example the story of one young Northern California family who was in the process of purchasing a new four bedroom, two-story home. The home had undergone a foreclosure and was being sold by the bank, so it hadn’t been lived in for several months. The couple fell in love with the house, put down a deposit, and began the process of getting the home inspected for processing of the bank loan.

Because the home was connected to city water, the home inspector called to have the water turned on at the home. What the inspector didn’t know, however, was that someone had left the faucet in the upstairs bathtub on with the drain stopper in place. Two days later when the inspector arrived to look at the house, the water had flooded the bathroom and run down the walls of the ground floor living room and dining room below, soaking all of the carpet in the upstairs and downstairs. The drywall had buckled and bubbled, collapsing under the weight of 48 hours of continuously running water.

The house sat for nearly a week before a claim was filed and cleanup work could begin. Mold and water saturation had already crept in. The walls and carpeting were torn up and workers dried out the house with industrial fans for weeks before finally repairing the walls, carpeting, and repainting the interior of the house. The couple had to walk away from the sale, even though all of this work had taken place at the bank’s expense. Why? Because every mold expert they called told them there was no way to completely get rid of the mold in a case like that, and it could return or get worse and cause further problems down the road. Mold, while usually harmless, can still cause structural damage and problems for people with breathing issues such as asthma or allergies. It can also affect the future resale value of the home, as most disclosures require you to report the presence of mold.

Whether mold is covered by a homeowner’s insurance policy depends on the source of the moisture and the wording of your policy. A separate mold rider can be purchased, and usually costs around $500-$1500. If mold results from an accidental situation that’s already covered by your policy, such as a pipe bursting in the example mentioned, the mold remediation cost should be covered. Flood damage is different and covered by a separate policy, however.

Most basic homeowner’s insurance policies exclude coverage for damage caused by mold, fungi, and bacteria, but that doesn’t mean a mold claim will be automatically denied. Claims will usually only be rejected if mold is caused by neglected home maintenance on the part of the owner or situations such as long-term exposure to humidity or repeated water leaks. Mold claims can be expensive for insurers, with the average claim falling between $15,000 and $30,000, causing many states to adopt limitations on mold coverage. Amounts vary, but a typical homeowner’s policy might cover between $1,000 and $10,000 in mold remediation and repair. They only way to make sure you are covered is to speak with your agent and go over your policy.

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