Mold Coverage and Insurance Policies

"Not covered, what do you mean?" Sarah whispered to her self, but wanted to scream.  Instead, she just stared at the adjuster like a deer in the headlights.  "I'm sorry," the adjuster murmured, "but your policy doesn't cover mold remediation."

Returning from three weeks of unimaginable fun in the Bahamas, Sarah and her husband Jack discovered that the washing machine water line had broken, spraying water all over the laundry room.  

There was mold growing on the laundry room walls as well as on the ceiling and walls in the bathroom below.  There must be thousands of dollars of work to be done and if isn't covered by their insurance, she had no idea how they would pay for it now.  

What is insurance for, if not for this?  Why isn't this covered?  

She felt cheated, . . . abandoned, . . . violated.

Mold coverage in insurance policies varies greatly from company to company and you must check with your insurance company to see what coverage you have purchased. 

What follows is a general synopsis of how I have seen different insurance companies in the United States deal with mold coverage.  As coverages change from policy to policy as well as from year to year, I will not identify specific companies and their policies, just general guidelines.  You must check your own policy to determine the coverages you actually have.

Example: Homeowner, Rental and Commercial policies, even issued by the same company, usually have differing coverages for damages, repairs and remediation.

General Mold Exclusion  
Every insurance policy has a General Mold Exclusion.  Wording for this exclusion usually follows this vein:

"Fungi", Wet or Dry Rot Or Bacteria meaning the presence, growth, proliferation, spread of any activity or "fungi", wet or dry rot, or bacteria is not covered under this policy.

There is a reason for this exclusion and its wording.  Insurance policies are designed to cover the costs of repairs to your property in the event of a sudden, unforeseen or accidental event.  Damage caused intentionally, by neglect, or abuse, is not covered under most insurance policies.  Insurance covers accidents, not maintenance.

To make this distinction, policies do not pay for any repairs, unless it is a direct result of a sudden or single, event or occurrence, which causes loss or damage.

Therefore, damage that results from failure to properly maintain your home or long term damage that could or should have been fixed, such as a slow leak, but wasn't, are not covered. This would also include fungal, mold or bacterial growth that was a result of the environment; especially in very warm, moist, humid climates, where mold and bacteria proliferate without a water leak occurring.

Example: Mold grows along the baseboards behind the bed or dresser, or in the corners of the room at the ceiling because of condensation resulting from high humidity levels, caused either by the climate or a bathroom shower. Neither clean-up nor repairs would be covered.

While this is a general policy, there may be situations where mold remediation might be covered.

Complete Exclusion
A few companies have a complete exclusion on any mold remediation, regardless of the source.  There are no instances where they will cover any mold remediation. Many policies with exclusions, will cover the costs of the covered repairs, such as drywall, paint and carpet; but they will not pay for any labor or equipment needed to clean or remediation the mold.

Some policies will also not cover the water loss itself, if mold has grown as a result.  Their reasoning - If your home had been properly maintained, the leak would have been discovered and corrected before mold had time to grow.

Example:  You take your family on vacation for 2 weeks.  A water line breaks as you drive down the street, flooding your home the entire time you are gone.  There is significant mold growth in the wet areas of the building.  With this type of coverage, neither the mold, nor the water loss damages would be covered.  You would have to pay for all of the repairs yourself.


Mold Riders
Many insurance companies, after announcing an exclusion on fungal, mold or bacterial remediation, will add back to the policy, a rider covering remediation and clean-up under limited conditions.  These conditions can include:

1. Mold growth that occurs as a result of a covered loss.
2. Existing mold growth that has to be removed/cleaned before damage from a covered loss can occur.

Example: With this policy, if you went on the same trip, as in the previous example, all the repairs, including the mold remediation, would be covered.

If your policy has the rider covering remediation from a covered loss, it still will not cover mold growth resulting from an uncovered loss, such as ground water or culinary water that enters through the foundation from the outside.

Limits of Coverage
Providing you have coverage for mold remediation resulting from a covered loss, the limits of this coverage vary greatly.  Your company could pay any one of the following:

1. From $1000 up to $100,000 toward the remediation of the mold only.  The repairs to the structure would be covered by the water loss portion of the policy up to the value of the policy.   The average cost allowance for the mold remediation by insurance companies is between $5,000 - $10,000 per occurrence.
2. From $1,000 up to $10,000 for the total cost of repairs.  This would include the cost of the mold remediation as well as all of the drywall, paint, carpeting, etc. 

Statistically the national average for the cost of a typical mold remediation, as well as my personal experience, is about $2,000 - $3,000 for the remediation and about the same or less for the repairs. Some jobs are more, some are less, but most people will never encounter a remediation situation of $50,000 - $100,000 where their entire home needs to be demolished. Most often, there is mold growing along the baseboard in a bedroom, or growing behind a kitchen cabinet or bathroom vanity.

It should be evident, that coverage for mold, fungal or bacterial remediation varies drastically from company to company.  It is imperative for home owners to carefully research what their policies cover and what risks they may still be exposed to.  Paying $5 less per month for a policy that does not have mold coverage is no bargain if you later have to pay $1500 to $5,000 for repairs that resulted in mold growth.  But then, maybe you always win at blackjack, too.

It is also important for agents to carefully read and discuss with company adjusters, what the policies they sell actually offer their customers.  There are few things worse that overselling your product to a customer and then watching the resulting anguish and heartache as they try to deal with the situation; while your credibility erodes and your client defects.

Mold coverage in insurance policies varies greatly from company to company and you must check with your insurance company to see what coverage you have purchased.

 

How To Spot A Bad Contractor

"What do you mean, 'It went a little over?'" Helen screeched. "The cost is twice as much as you promised, the cabinets look terrible and it's still not done! We went to the Olive Garden for Thanksgiving dinner, Cafe Rio for Christmas dinner but I will not go anywhere for Valentines Day. I want to cook dinner for my family in my new kitchen!"

Her contractor mumbled something about suppliers and subs, but she cut him off. "I am sick and tired of your excuses. I am sick and tired of your lies. I want this done by Friday or I will sue you for incompetence, . . . for ignorance and . . . and . . . . " In frustration Helen wheeled around and stormed out of the room as the tears began to flow.

What can you do to spot a bad contractor? They seem wonderful at the onset, they say all the things you want to hear, but before the job is over, you're ready to tear them apart, limb from limb.

Avoiding a shoddy contractor isn't as hard as most people imagine. There are tell-tale signs that can tip you off before you end up neck deep in a torrent of trouble. By carefully reading the descriptions below, you will be able to avoid the devastation of choosing the wrong contractor.

1. Bad contractors are always late. I don't mean five or ten minutes late, either. Traffic or phone calls with other clients, can throw the best laid plans awry. With a bad contractor, late is measured in hours, days or weeks. Our company policy is to inform the client if you will be more than ten minutes late and reschedule if necessary.
2. Bad contractors never return phone calls. You know to walk away when their voice message says, "We're sorry, but the mail box belonging to that number is full. Please try your call again later." Calls are not returned because there is no good answer for you and the decision is made to wait until there is. Since the answer never comes, the return phone call doesn't either. If a contractor doesn't have the courage to face up to life as it really is, they will not be able to control it and complete your job in a timely manner
3. Problems are always someone else's fault. The builder sounds like an immature adolescent, unable to actually admit they made a mistake or attempt to correct it. Good contractors seldom have to explain what went wrong. All their time is spent explaining how it will happen and then they make it happen. They know that "the size of the mess you make is not nearly as important as how well you clean it up."
4. Bad contractors always take two to three times longer than they promised. They have a bad habit of saying what you want to hear instead of what will realistically happen. This is usually an attempt to obtain the job. Good contractors will always estimate more time than actually needed. They realize things will go wrong, and if they don't, the project is completed sooner than you expected. Watch the consistency between what they promise and what they do from the very beginning. The primary rule to remember is: "When it's finished is not nearly as important as that it is finished when promised."
5. Bad contractors never actually complete a project. There is always something that wasn't done or the perennial punch list that remains as a constant source of irritation. Good contractors will use sub-contractors who examine their own work, usually with the owner, and ensure everything is done properly before they leave. This habit virtually eliminates punch lists on smaller jobs and greatly reduces them on large ones. A task that will take one half-hour to correct while the technician is still there, with tools ready, will consume three to four hours if someone has to come back and do it later. Profitability and reputation go down the tubes.

You can also ask for referrals, credentials or lists of previous customers. Undesirable contractors are usually slow to provide these. Another problem is that if you do receive any referrals, they are often sanitized or fabricated. If you can talk to other customers, ask how the contractor was to work with and pointedly ask about the signs above.

If you watch for these tell-tale symptoms, you will be able to spot a bad contractor before you are in too deep and your repair or remodel can be a pleasant experience.

Four Rules to Survive a Disaster

Whether its a flood, fire or earthquake, here are four rules everyone needs to know to survive a disaster. Careful attention to these principles will save owners, adjusters and restoration companies countless hours of headaches and heartaches.

Rule 1 - My damages are my responsibility. Restoration companies are here as part of the solution, they are not part of the problem. I must always place the liability on the right entity.

Rule 2 - Things break. That is why I have a disaster. The restoration company's job is to repair my home as close as possible to its pre-loss condition, but sometimes, they can only make the imperfect look perfect.

Rule 3 - Everyone is busy. I have budgeted neither time nor resources for this problem. Before I called, the contractors were also busy repairing the property of other people. But, as I do my best to make decisions and provide access to my property during regular business hours, they will do their best to complete the work as soon as possible and practical.

Rule 4 - Restoration is a lot like pregnancy. It always takes longer than we want and the last two weeks can be unbearable.

Now you know the four rules to survive a disaster.