How to file a successful mold claim

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Mold insurance claims can be complex because standard homeowners insurance only covers mold in specific situations and has limits on the amount it will cover.

The question of who pays for mold remediation depends on what caused the mold. Generally, your homeowners insurance will only cover the cost of mold mitigation if it was caused by a covered peril, and only up to the coverage limits, which vary depending on your insurance company.

“[When] you have an event that causes water to impact the home, such as a storm, broken pipe or firefighting efforts, the mold can spread, leading to a serious situation. The greatest concern about mold for insurance claims is whether it existed before or after the event,” says Matthew Blumkin, a principal and public adjuster at the Greenspan Co./Adjusters International in Los Angeles, California

To file a successful mold claim, it’s important to understand how and when homeowners insurance covers mold and what the limits are.

Understanding mold claims

Mold is a fungus that grows in moist conditions. When present in large amounts, it can cause health problems in people, particularly respiratory problems. Inhaling mold spores, handling them or accidentally ingesting them can all trigger health issues. 

Any place that has an intrusion of water, conditions of high humidity or dampness is an ideal breeding ground for mold. 

When mold appears in the home, it is crucial to address the problem right away. The sooner you address the issue, the less likely it is that mold will spread and continue to do damage, both to your health and your home. 

Your homeowners insurance policy may or may not cover mold contamination. Some policies cover mold only if it is the result of a named peril, while others offer broader coverage. 

If you have a mold issue, you should address it promptly. And if your insurance covers your situation, consider filing a claim. 

Does homeowners insurance cover mold damage?

While a homeowners policy often covers mold, there are major restrictions to coverage. In most cases, mold is only covered if caused by a covered peril listed in your policy, such as accidental water damage. 

If a pipe bursts in your home and the resulting water damage causes mold to develop, your policy should cover the damage. Here are a few other situations where your homeowners insurance covers mold damage:

• Sudden washing machine leak
• Sudden water heater leak
• Water damage caused by putting out a fire
• Burst or frozen pipes

However, if mold is due to something that isn’t a covered peril — for example if poor home maintenance or an infestation of insects causes the problem — homeowners insurance is unlikely to cover the mold problem. You should read your policy in full to determine what is and isn’t covered.

Many insurers put a cap on mold damage coverage. While it varies by insurance company, coverage caps typically range from $1,000 to $10,000. It is possible to purchase higher coverage levels, but additional mold coverage can be expensive. 

Some insurance policies might offer broader coverage for mold damage beyond merely covering mold associated with a named peril. It is important to talk to your insurance company to determine the extent of your mold coverage. 

If the mold results from poor maintenance or failure to complete repairs, you will have to pay for mold remediation yourself.

Who pays for mold remediation?

Your insurance company pays for mold remediation if the mold was caused by a covered peril, but it will only be covered up to a certain dollar amount. The coverage amount varies by insurer and policy but typically ranges from $1,000 to $10,000 per occurrence. You can get extra coverage through your insurance company by paying more. 

If the mold is the result of poor maintenance or failure on your part to complete repairs, you will have to pay for mold remediation yourself.

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How to file a mold claim

Mold insurance claims are usually straightforward, but some factors can impact your claim.

For example, if your pipes burst, you may not discover mold growing in your walls until weeks or months after this happened. If this is the case, you will need to contact your insurance company to verify you can still make a claim for the damage. 

In many cases, mold damage may not be found until months after the incident that caused it. However, many insurers require homeowners to report mold damage within six months of the date of the event that caused the mold. In many cases, mold damage may not be found until months after the incident that caused it. If you are outside this claim window, you may not be able to file a claim for the damage, which is why it is important to have your home tested for mold after a flooding event or water leak. 

“We find that time is the biggest problem resulting in a mold claim. The longer it sits, the more it grows. The more it grows, the harder it is to deal with,” Blumkin says.

Here is a quick rundown of how to file a mold claim: 

• Stop the leak as quickly as possible. If a water leak causes mold, turn off the main water valve to stop the water leak. 

• Contact your insurance company. Immediately report any water damage or mold in your home.
• Document the damage with photos and videos. Take photos and videos from multiple angles, and document all the damage. 

• Take steps to prevent the mold from growing and spreading. Ventilate the affected area and clean up any excess water. If possible, run a dehumidifier or air conditioner to dry the area. If your insurer asks you to make temporary repairs or take further preventive steps, you should follow their directions as long as it is safe. Keep receipts for any supplies you need to make temporary repairs. 
• Fill out a claim form and submit your documentation. Every insurance company has a unique claim process, so be sure to follow all the instructions they send you regarding your claim. This will make sure your claim is processed quickly and fairly. 
• Receive a visit from the insurance adjuster, who will review and document the damage. Make sure you are available to show the adjuster all the damage and point out anything they may have missed. 
• The insurance company will approve or deny your claim. Once your insurer has approved your claim, you will need to find a local mold removal company to have the damage cleaned up and repaired properly. Your insurer may have preferred companies they like to work with, or they may leave it up to you. 
• Provide all documentation and receipts to your insurer. Once your home has been repaired and the mold removed, you should provide all documentation to your insurer so they can reimburse you for the repairs. The insurer will issue a payout to you or directly to the mold removal company. 

What to do if your mold claim is denied

Mold claims can be tricky, particularly if it was caused by a leak instead of a storm. Many insurers will try to argue that the mold was caused by the homeowner’s failure to repair a leak promptly. 

If your insurer has denied your mold claim and you disagree with your insurer regarding the cause of the mold, you can appeal the decision. Most insurance companies allow policyholders to appeal a decision on a claim, but you will need to provide evidence that supports your claim to convince the insurance company you are correct. 

If your insurer denies your appeal, there are a couple of other options available to you.

Hire a private adjuster

Private adjusters are professional insurance claim handlers that you can hire to handle your claim and negotiate with the insurance company. Private adjusters have experience dealing with insurers and can often get a claim or appeal approved. 

In most cases, a private adjuster will appraise the damage to your home, prepare an estimate, deal with the claim paperwork, determine your coverage, and negotiate with the insurance company’s claims adjuster.

However, they do come with a fairly steep price tag. A private adjuster will typically charge a percentage of the payout amount they get the insurance company to pay. Fees typically range from 5 to 20%. 

Hire a lawyer

The final option is to hire a lawyer and sue your insurance company. If you feel you are being treated unfairly by your insurance company, a lawyer may be able to help you get your claim settled. Like a public adjuster, a lawyer typically comes with a big fee, so hiring a lawyer should be saved for major claims. 

When is mold damage excluded from homeowners insurance coverage?

There are numerous exclusions when it comes to mold. Here are a few common exclusions:

Neglect or a lack of maintenance: If a lack of maintenance or neglect leads to water damage or mold, your insurer will most likely deny your claim. Examples of neglect exclusions include:

• Claims dealing with improperly sealed doors or windows that lead to water leaks or mold.
• If a leaky faucet or pipe not repaired promptly leads to mold, your insurer will most likely deny the claim. Repair any leaking pipes or faucets as soon as you notice them. 
• Mold in a poorly ventilated room that is commonly damp or moist, such as a bathroom, can lead to a claim denial. Always make sure your bathrooms and basements are well-ventilated. 

Sump pump failure: Mold and water damage due to a sump pump failure are typically not covered by homeowners policy, but it’s possible to add sump pump failure and water backup coverage as a rider or endorsement on your policy. This coverage comes with an additional premium, but in most cases, it is pretty affordable.

Flood damage: Flood damage is excluded from homeowner insurance policies. To be covered, you will need to get a separate flood insurance policy. However, coverage for mold is rare.

Are there caps on the payout for mold damage?

Most insurers have a cap on the amount they will pay for mold damage. While it varies by insurance company, it’s usually $1,000 to $10,000. While this may be enough to cover a small to moderate mold incident if you have severe mold damage in your home, these coverage caps won’t provide enough coverage.

One way to stretch your limited mold coverage is to ensure that only mold mitigation costs are applied to policy limits. Blumkin advises homeowners to make sure that only the additional cost for mold remediation above what would normally be charged if mold were not present is applied toward your policy’s mold limitations rather than the full repair cost.

For example, if restoration crews are cutting out wet or burnt drywall, only the additional cost for handling moldy drywall rather than regular damaged drywall should be placed into the mold remediation category.

“The fact that it was moldy doesn’t mean that 100 percent of the removal cost goes into the policy mold limits — only the increased cost to deal with mold on the drywall should go into the mold limitation amount,” Blumkin says.

So, for example, if it costs $1 per square foot to remove drywall that is damaged or destroyed as part of the covered event but it’s $1.10 per square foot to remove drywall with mold on it, only the extra 10 cents should be applied toward the mold coverage amount. If you are concerned about the mold limits on your policy, you can purchase additional mold coverage as a rider, though this is often expensive.

How to prevent mold damage in your home

There is a good chance your home already has mold somewhere. It’s just not an emergency yet.

“Every home across the country has some level of mold in it because it’s organic, and a lot of times it’s innocuous enough,” says Blumkin.

Mold is everywhere but usually doesn’t pose a problem. You can do several things to prevent mold from growing in your home.

Moisture control: Controlling the moisture levels in your home is key. To prevent mold from growing, you must determine where the mold is coming from and control the humidity levels in your home. You can use ventilating fans and dehumidifiers.
Inspect your pipes: Inspect your faucets, pipes, and hoses regularly. Always fix any leaks you find immediately.
Rainwater: Always ensure your gutters and downspouts are directed away from your home.
Roofing: Have your roof inspected regularly and repair any damage immediately. Keep gutters clean and free of debris.
Carpet: Avoid installing carpet in areas that are often damp or collect moisture, such as bathrooms and basements.
Use professionals: If you have a mold issue, you should hire mold professionals to deal with it. 

“If you’re a homeowner and you do identify mold, the best thing to do is hire a firm that specializes in mold remediation and has all their certifications. It’s probably not the kind of thing you want to try to remediate by yourself,” says Jeff Schwenk, president of Continental Machinery Co.

Blumkin suggests sitting down with your agent or broker to understand the coverage limits for mold remediation. “It can get expensive to repair mold, so the more help homeowners can get in covering those costs [through insurance] the better,” says Blumkin.

Mold can be a homeowner headache, but you can resolve many issues by taking preventive measures. If you have a mold problem, your homeowners policy could help you tackle the issue. 

Chris Kissell

Contributing Researcher

 

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Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.

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