Mold Coverage for Home Insurance

A common problem faced by homeowners, particularly in the moister warm areas of the east coast, west coast, and south, is the accumulation of mold. Mold, a natural microorganism, exists everywhere, but it requires moisture to become active and grow.

Mold spores can cause health problems once they land upon a moist spot and begin growing. They produce allergens, irritants, and, occasionally, mycotoxins that can be toxic.

You are probably familiar with the mold that forms upon bread products after a certain amount of time. That mold is an example of a relatively harmless mold occurring often.

The key point about mold to homeowners or renters is that mold is dependent upon moisture to grow. To prevent it, we need to control moisture in the home.

An excellent source of information about mold may be found at the Environmental Protection Agency’s website (EPA).

Home Insurance Coverage and Mold

In the home insurance contract, coverage for mold is dependent upon the source of the moisture that provides the environment for the mold to grow.

Home insurance coverage is based on protection against perils that are covered in the policy.

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Perils Covered under the Home Insurance Policy

Peril is the insurance term for a specific risk – or reason for a loss. Most home insurance contracts cover the following perils:

• Fire, smoke, explosion, lightning
• Windstorm, hail, civil unrest, and vehicular damage – from cars belonging to others
• Theft, vandalism
• Falling objects, including trees
• Weight of ice, sleet, and snow
• Freezing, rupturing, or sudden and accidental overflow of a plumbing, heating, or air conditioning device — or a household appliance

Looking carefully at these perils, you can understand how moisture and water can occur because of many of these.

Extinguishing a fire usually involves water, roofs can be breached by storms as well as falling objects.

Weight of ice, sleet, and snow can cause roof leaks. Obviously, the freezing, rupturing or sudden and accidental overflow of a plumbing, heating, or air conditioning device. Bursting of a washer hose can cause water damage.

All of these situations can lead to an accumulation of moisture subsequently leading to mold. To insurance companies, though, the key words are “sudden and accidental”. When an adjustor looks at a mold loss, he or she looks at the cause of the moisture to determine if the coverage will be afforded under a home insurance policy.

A slow leak beneath the sink causing rot and mold will be considered wear and tear rather than new damage. A drip in the attic resulting in a leak may be covered if it was caused by a massive snowstorm a year ago, but not if it is a result of an ongoing break in the flashing of a roof.

Some insurance companies have added a clause to the home insurance policy that affords coverage for fungi. This gives limited mold coverage. It is possible, if you wish to do so, to purchase limited mold coverage.

Information on this may be obtained from an NAIC research document at the National Association of Insurance Commissioners website.

Obtaining Home Insurance Coverage for Mold

The least expensive method of obtaining home insurance coverage for mold is to have it attached as a rider to the standard home insurance policy.

Alternatively, you can ask, when you request a home insurance quotation, to see if the particular insurance company provides mold coverage. A stand-alone policy is available from specialty brokers to cover mold and fungus damage.

Getting Comparative Home Insurance Quotes

Each year you should obtain comparative quotes for your home insurance policy because individual insurance company’s rates increase, depending upon their experience in your geographical area.

Examining insurance coverage can not only save you money, but also ensure that you do not receive surprises such as non-coverage when you file a claim.

The process of obtaining comparative quotes is easy, but a bit time-consuming.

A good way to expedite the process is to follow it carefully and keep files of your finding from year to year for reference. The steps in acquiring these comparative quotes are as follows:

Choose the Best Companies for your Quotes

Insurance company statistics are available from your state’s insurance commissioner. Insurance regulation is one of the areas reserved to the states rather than the Federal government, so each state has their own website and officials in charge of licensing, rates, consumer information, and general overseeing of the insurance industry within the state.

The state website can help you determine the licensing status of insurance companies and agencies. Some state websites will also help you determine the financial stability and approval ratios for particular insurance companies. This information is also available from:

• National Association of Insurance Commissioners (NAIC)
• A.M. Best Rating Service
• Standard and Poor’s Ratings

Be sure to read the criteria stated with each link to determine how they rate the information provided.

Determine the Appropriate Amounts of Coverage

Remember when insuring a home that the price of the home is not the same as the insurable value for the home. When you purchase a home, you purchase the land and amenities as well as the actual building.

Depending upon the market, you may have paid more or less for the home than the cost of rebuilding it. There are calculators online that help you determine the replacement cost of a building depending upon the area and construction.

Replacement Cost or Actual Cash Value

When insuring a dwelling, it is an excellent idea to insure the building and contents for replacement cost coverage.

Replacement cost infers that, in the event of a total loss, the insurance company will replace the building and contents with like type and construction.

This is important because, if you own an older building, the materials may not meet current code and just paying for the actual cash value will leave you, as homeowner on the hook for upgrades needed for construction that is more modern.

Then, too, construction materials’ costs fluctuate heavily depending upon demand and supply.

A tornado sweeping through town can cause the costs of reconstruction to skyrocket because the supply of labor and materials is limited.

Actual cash value coverage takes into consideration the wear, tear, and age of the item to be replaced. Your claim is then, less these factors.

Overall, replacement cost coverage is the better choice even though you may have to purchase more total insurance to cover losses.

Perils Insured Against

Perils covered are determined according to the home insurance form you choose. Your agent will advise you about the form of coverage you should purchase.

At this point, you should be sure to ask the agent or insurance company about mold coverage if this is a concern.

Deductible

Choose an appropriate deductible for your purposes. Often a larger deductible can earn credits against premium costs, but are deducted from any loss that may occur.

Quotation Evaluation

Look at the quotes you have obtained carefully and read the coverage offered as well as evaluate the insurance companies.

Choose the best coverage for your purposes and, if mold coverage is important to you, examine the quotes to be sure that coverage is offered.

Buying the Finished Policy

It is important that you read your insurance policy carefully to determine, not only the coverage given, but also your duties under the policy.

You need to be certain to follow the policy instructions.

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