More on Home Insurance
More on Home Insurance
Updated December 14, 2020
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Mold damage can cost thousands of dollars to remediate and is harmful to your health, but its removal is typically not covered by homeowners insurance unless the underlying cause of mold growth is a covered peril. Mold that forms because of sudden and accidental water damage, like a burst pipe, is generally covered by homeowners insurance, but mold that forms over time due to high humidity, leaky plumbing, or flooding would not be covered.
Additionally, homeowners insurance doesn’t cover property damage that arose due to maintenance problems or neglect. If your insurer determines that the mold growth in your home was preventable, or that the mold was there prior to the incident which you say caused it, your claim will likely be denied.
Most insurance companies limit payouts for covered mold removal claims to anywhere from $1,000 to $10,000. Higher coverage limits may be available via a coverage add-on, or endorsement. Mold coverage is a common policy add-on in high-humidity states like Florida where the probability of mold contamination is higher.
Homeowners insurance typically excludes coverage for mold removal if the infestation was considered preventable
Mold resulting from leaky plumbing, poor ventilation, high humidity, or flooding likely won’t be covered by your policy
If the cause of mold growth is a covered peril in your policy, like a burst pipe or malfunctioning appliance, your insurance company may pay for its removal and any repairs
Most causes of pervasive mold growth in homes are due to excessive moisture from water leaks and high humidity. These forms of water damage are not covered by homeowners insurance, as they’re generally gradual and happen over an extended period of time. Therefore, the resulting mold growth is also not covered.
But there are instances where water damage and resulting mold contamination are covered by homeowners insurance. If water damage and mold are caused by a covered condition in your policy — like a burst water heater — then mold removal and repair costs would probably be covered in the event you file a claim. In insurance speak, this phenomenon is referred to as “proximate cause”, which basically means that if the cause of damage to your home is an insured peril, then the entire loss is covered.
Most insurance companies cap mold removal and repairs payouts at $10,000, but you can typically purchase additional mold coverage that increases your payout limits to as much as $50,000. This add-on may also broaden your coverage to causes of mold growth that aren’t covered by your policy.
Bear in mind that some states require insurers to provide policyholders with a certain amount of mold coverage. Currently, Florida, New Jersey, New York, North Carolina, and South Carolina are required to cover between $5,000 and $50,000 in mold remediation coverage, regardless of what caused it.
A standard HO-3 homeowners insurance policy lists mold, fungus or wet rot as exclusions, unless under the following conditions: the mold is hidden within the walls, ceiling, or beneath the floors, if the mold growth results from the “accidental discharge or overflow of water or steam”. Mold can begin to form anywhere from 24 to 48 hours after an incidence of water damage, so if you’ve recently had a pipe burst or appliance malfunction, make sure the affected areas are completely dry.
Here are a few real-world examples where that may happen.
Your water heater ruptures - A burst water heater can cause a considerable amount of damage — like, 60 gallons of water worth of water damage. If it bursts and mold forms on your surrounding walls, its removal and replacement walls may be covered
Your washing machine hose bursts - If your washing machine had no prior mechanical problems, was assembled properly, but still managed to leak or malfunction and caused mold buildup behind or under the appliance, your insurer may cover mold remediation
Firefighter or fire sprinkler causes water damage - If mold builds up from the water that was used to extinguish a fire — whether from a firefighter or fire sprinkler — removal of any ensuing mold growth may be covered
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Like rodent or bed bug infestations, mold has a reputation for being a home maintenance issue, and damage that results from a lack of upkeep or neglect is excluded under most homeowners insurance policies.
Mold formation is relatively gradual and — in its worst form — takes several months of accumulation before you realize it's caused irrevocable damage to your drywall and flooring. At that point, it may be difficult for you or your insurer to correctly identify the exact cause of the mold and they may chalk it up to neglect or pre-existing mold growth.
Mold is also extremely costly to remove, with removal costs as high as $30,000 depending on the cause, extent, and location of the buildup, and many insurance companies want no part in covering something as preventable and costly as mold.
Here are a few causes of mold growth that are typically not covered by a standard homeowners insurance policy.
Leaky plumbing - If the pipe beneath your sink has been leaking for years and causing extensive mold buildup beneath the floors and within the walls, your insurer likely wouldn’t cover the damage
Humidity - If the mold infestation in your home is caused by high humidity, that also would not be covered
Flooding - If your home incurs water damage caused by flooding and mold begins to grow, its removal would not be covered, as flooding is never covered by homeowners insurance
Sump pump backups - If your basement sump pump overflows and causes water damage, any resulting mold or mildew would not be covered by your policy
In many cases, homeowners insurance claims related to mold are part of a larger water damage claim. For example, maybe a pipe burst, flooded your basement, and months later you discover mold growth in your walls.
In the event you discover mold months after the initial incident, reach out to your insurance company to see if you’re still able to file a claim for the damage. Most insurers require you to report mold damage no later than six months from the date of the covered event that caused the mold.
Here are a few steps you should take to ensure that you’ll get reimbursed for mold-related loss.
Contact your insurance company right away to report the water damage incident or mold growth
Document the damage with photos and videos
Ventilate the affected area as much as possible to prevent further mold growth
Closely follow your insurance company’s instructions for filing a claim
Contact local mold removal companies to get cleanup and repair estimates
Provide insurance company with estimates and receive a payout
Mold is expensive, and filing claims related to mold growth can cause your insurance premiums to skyrocket. The best way to prevent infestations is to provide your home with regular upkeep. Follow these tips to keep mold out of your house.
Relative humidity levels higher than 60% are ripe conditions for mold growth, so you’re going to want to keep your levels between 30% and 60%. If your home has a propensity for reaching peak levels, invest in a dehumidifier.
You’ll want to be sure your kitchen, bathroom, and laundry room all have proper ventilation. These three areas of your home are hotbeds for fungi, and ensuring all are equipped with proper fans and ventilation is a good way to keep mold out.
If you notice water is leaking in from the outside through your roof and windows, or the pipes beneath your bathroom sink produce a steady drip every time you run the faucet, there are a couple things you should keep in mind:
There’s more where that came from, so inspect areas around the leak and if necessary, dry, ventilate, and clean affected areas wearing gloves using detergent and water
Fix the source of the leak either on your own or by contacting a contractor or plumber
Inspect your roof once and a while to make sure there aren’t any easy access points for water. While you’re up there, check your gutters and clear them of any buildup of leaves or debris that isn’t allowing for proper drainage of rainwater.
Carpeting, especially carpeting in your basement, bathrooms, kitchen, or laundry room, is prime territory for mold. Wall-to-wall carpeting in particular should be avoided, as any moisture that develops in the drywall or baseboards could find its way underneath, and the only way to properly clean the resulting mold would be to tear up the carpet. If you decide to carpet your home, be mindful of its placement, especially in areas prone to water damage.
Pat Howard is a homeowners insurance editor at Policygenius in New York City. He has written extensively about home insurance cost, coverage, and companies since 2018, and his insights have been featured on Investopedia, Lifehacker, MSN, Zola, HerMoney, and Property Casualty 360.
Pat has a B.A. in journalism from Michigan State University.
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