Home Insurance Guidelines: Mold Facts and Coverage

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In recent years, horror stories about “toxic mold” growth in homes, businesses and schools have become a common theme in the news. These headlines have all got us wondering: just how afraid of mold, fungi and bacteria should we actually be?

Mold spores can certainly be toxic, but scenarios in which growths are large enough to pose poisoning risks to humans are rare. The more common problem with out of control mold growth is property damage. What’s worse is that most insurance policies don’t cover mold damage, and typically insurers deny these kinds of claims. So, what should you do when you find mold, fungus or bacteria in your home?

The more common problem with out of control mold growth is property damage…and typically insurers deny these kinds of claims

Types of Mold

For homeowners, the most important kinds of molds to know about are the four most common indoor molds: Cladosporium, Penicillium, Alternaria, and Aspergillus. Mold is happiest and grows best where conditions are warm and damp, so basements and showers are high-risk growth areas. Check out the CDC’s list of basic facts about molds here for more details.

In terms of health, the good news is that most people are not affected by mold at all. But for those who are mold-sensitive, certain types of mold have the potential to cause some severe and mysterious symptoms. Routine exposure in the home or workplace can cause eye and skin irritation or breathing difficulties in people with pre-existing conditions like asthma or eczema. And for those with serious mold allergies, reactions can be much more severe. The Institute of Medicine and the World Health Organization has even found that exposure to mold causes respiratory problems in otherwise healthy children. For those with chronic lung illnesses, mold infections are a serious danger. Generally speaking, children and the elderly carry are at a higher risk.

If you believe you or someone you love is becoming ill from mold exposure, see a doctor. Remember that agencies like the CDC cannot treat health problems and only a local health care provider can provide the care you or your family needs. The CDC recommends that you first consult your family doctor or PCP and ask whether you need to see a specialist like an allergist, an infectious disease doctor, or a pulmonary physician. Remember, if your health problem is an emergency, get help immediately.

Insurance Policies and Mold

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Mold damage also harms the value of your home. Actual devaluation is subjective, but since severe cases of mold infestation can make it nearly impossible to insure a home, mold can render your home essentially unsellable. While the different kinds of spores might have slightly different growth patterns, all require moisture and warmth, and all should be eradicated when found.

mold can render your home essentially unsellable

Whether or not your home insurance will cover mold-related damages or mold eradication procedures depends on your policy and the factors contributing to the mold’s growth. Most mold growth is caused by water leakage or poor ventilation and unfortunately, many homeowners policies do not cover all kinds of water damage.

Typically, standard homeowners policies do not cover water damage caused by “maintenance” problems. These include slower, ongoing problems like continuous water seepage or repeat leaks, ongoing humidity problems, problems related to your landscaping or drainage on the property, or condensation. You should also know that almost all homeowners policies generally exclude flood damage, so if your home develops mold from a flood this is probably not going to be covered.

Conversely, typical homeowners policies will often cover sudden and accidental water issues such as burst pipes. If you have sump pump coverage or sewer back coverage, you probably know it, but check your policy to be certain. Other than these kinds of water sources, though, the odds of your policy covering your water source are slim.Remember to make sure to investigate to make sure your pipes were in proper working order and that there were no failures or defects; finding this kind of water damage source may be the only way you can get coverage.

The bad news? Insurance companies are getting tired of mold too. Even if your insurance does cover some water damage many companies now explicitly limit or completely exclude coverage mold-related damage, regardless of the source. Be sure to read your homeowners policy every year, because providers are starting to trim their mold endorsements.

Insurance companies are getting tired of mold too. Even if your insurance does cover some water damage many companies now explicitly limit or completely exclude coverage mold-related damage, regardless of the source

If you need mold coverage and don’t have it, there may be other options. Some policies, for instance, offer “buy-back” endorsements for mold claims which let you pay more money in exchange for some limited mold coverage. Other policies simply cap the amount of mold coverage or pay only for certain things such as cleanup or testing. So whether you’re buying a new home or switching policies, just be aware: it is far more difficult to find a mold damage inclusive policy for a home that has a history of mold.

Warning Signs and Preventative Measures

The very best way to protect yourself, your family and your home from mold is to prevent it! There is no substitute for preventative measures when it comes to mold infestation. Don’t rely on your insurance to make you whole when it comes to mold. Take your health and your home into your own hands and follow these simple steps to avoid mold (and check out this guide from the Insurance Information Institute for more information):

  • Keep the humidity level in your home low, preferably no more than 30-50%.
  • Use and maintain bathroom ventilation systems.
  • Use both air conditioners and de-humidifiers.
  • Install and maintain all-season attic and crawlspace ventilation systems.
  • Keep drain lines from your air conditioning unit clean and unobstructed.
  • Use exhaust fans when cooking, dishwashing, and using any other appliance that creates moisture.
  • Add mold inhibitors to paints before using them.
  • Insulate windows, walls, pipes, roofs, exterior, floors and other cold surfaces to reduce condensation.
  • Routinely check indoor sources of moisture (leaky pipes, appliance hoses, faucets, toilets).
  • If you see condensation or water collecting anywhere, dry it quickly and find the water source so you can get rid of it.
  • Use steel-reinforced hoses instead of plastic ones.
  • Check all entrances for leaks, stains, and odors.
  • Fix plumbing problems right away. Wet areas that get and stay dry 24-48 hours after a leak or spill happens usually do not mold.
  • Don’t install carpet in wet areas like bathrooms, basements and kitchens.
  • Clean bathrooms with mold killing products like bleach and keep them dry.
  • Line crawlspaces with plastic sheeting.
  • Repair holes and cracks in walls and foundation of basement and crawlspaces.
  • Make sure landscaping outside slants away from your foundation.
  • Clean and maintain your rain gutters and drainpipes.
  • Watch your utility bills; an unusually high water bill could signal an interior leaking problem.
  • Turn off your main water valve when you travel.

Take your health and your home into your own hands

The Bottom Line

Recognizing the sources of mold growth and the costs of letting them go is the first step to mastering this situation. The next step is understanding exactly what your home insurance policy does and does not cover when it comes to mold and water damage—two different things. Once you understand your the risks that mold poses specifically to your family and property, you can learn to control it.

Remember, mold doesn’t have any tricks up its sleeve. It needs very specific things to grow and its movements are predictable. So until mold develops a genetic resistance to bleach, you’re in charge here.

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