Does the Average Homeowners Insurance Cover Black Mold?

Permanent removal of mold can be expensive

Permanent removal of mold can be expensive

No one likes the thought of mold growing in their homes. In addition to the “yuck” factor, mold growth can damage property and, in some cases can lead to health problems. Permanent removal of mold can be expensive, so people will sometimes look to their insurance company to cover the costs. The typical homeowners insurance policy only covers mold damage if the mold occurs as a result of another type of loss covered under the policy.

By Any Other Name ...

Most types of mold are harmless to people and those who do experience adverse reactions recover completely once the offending substance is removed. However, prolonged exposure to a form of black mold known as toxic black mold (Stachybotrys chartarum) can lead to more serious health issues. While some molds are more toxic than others, insurance coverage is not dependent on the type of mold. In fact, most companies use the broader term “fungi” to mean any type or form of fungus, including mold, mildew, and any toxins, spores, scents, or other by-products resulting from fungi.

Coverage Depends on the Cause

According to Laurie Pegler, a coverage attorney with the Property Loss Research Bureau, most homeowners policies are endorsed with the Limited Fungi form. “Under this endorsement,” Pegler explains, “mold is excluded except for losses arising out of fire or lightning or, subject to a reduced coverage limit, losses arising out of another loss covered under the policy.” For example, homeowners policies cover water damage resulting from the accidental discharge or overflow of water or steam from a plumbing system or from within a household appliance. If a covered water loss results in mold growing within a wall, undetected over a period of time, the policy will provide coverage. Now suppose that mold growing behind your shower walls has caused the drywall to rot. Since this problem has not resulted from another loss covered under the policy, the costs to repair the shower wall will not be covered by insurance.

Coverage Limitations

When coverage does apply, the policy or attached endorsement typically limits coverage to $5,000 or $10,000 per policy term. This is the maximum amount that the insurance policy will pay to remove the mold from the property; tear out or replace walls or part of a building to gain access to the fungi; and test air or property to confirm the absence or presence of mold.

Excluded Coverage

Insurance companies exclude coverage for ordinary mold damage because while damage is not intended it’s also not accidental. Mold grows as a result of environmental circumstances that can usually be corrected or controlled by the homeowner through home maintenance and repair of deteriorating property (such as that shower wall). Think of it like this: The homeowners insurance policy is not intended to be a warranty or a maintenance policy. Loss or damages resulting from property that is worn out or naturally deteriorated are not covered under the policy. Nor would you want them to be, because if wear and tear or maintenance issues were covered, the number and costs of claims would skyrocket – and so would premiums.

About the Author

Lynn Knauf has been involved in the insurance industry for more than 25 years working in a variety of positions including underwriting, claims and government affairs. She has written on insurance and political issues since 2010. Knauf holds a Chartered Property Casualty Underwriter designation.

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