Does Homeowners Insurance Cover Mold and Flooding?

You may be surprised to learn that the homeowners insurance you purchased, which is required by any mortgage lender, doesn’t cover everything. In fact, things like floods and mold are probably not covered.

It pays to read the fine print and educate yourself before you choose a policy or add on to your current one.

Mold

Mold is one issue you can encounter that your homeowners policy may not cover. Typically the cause of the mold may be the reason. Mold can grow in any home and moisture is the source. It can result from high indoor humidity, flooding, or a leaky roof or dishwasher.

Facts:

• Most basic homeowners insurance policies exclude coverage of damage caused by mold, fungi, and bacteria.
• Exceptions may made for the cause of the specific case of mold. If mold results from a sudden and accidental incident that is covered, like a burst pipe, the cost of remediation should be covered.
• It might be possible to purchase a mold rider as an add-on to your homeowners policy. It is best to talk to your insurance agent about the potential need for additional mold coverage. Then weigh the additional cost of the rider versus the potential risk before making a decision.

To lower the risk of mold in your home:

• Reduce indoor humidity with air conditioners and/or dehumidifiers.
• Use household cleaners with bleach, which kills mold.
• Choose paints and/or primers that contain mold inhibitors.
• Regularly clean and maintain gutters to avoid overflow and also check roof for leaks.
• Don’t put carpets in wet areas, like the bathrooms.
• If you have flooding, remove and dry carpet, padding, and upholstery within 48 hours.

Flooding

Standard homeowners insurance does not cover flood damage. You can, however, protect your home and your wallet by investing in a separate policy, which may be available from your insurance provider, or you can get one from the National Flood Insurance Program.

These add-on policies typically provide replacement cost coverage for the structure of your home, but only actual cash value coverage for your possessions.

• Replacement cost coverage pays to rebuild your home as it was before the damage.
• Actual cash value is replacement cost coverage minus depreciation.
• There may also be limits on coverage for furniture and other belongings stored in your basement.

If your home is located in a high-risk flood area (flood zone) you may have had to purchase flood insurance in order to secure your mortgage. If you don’t remember, it pays to give your policy a fresh read and decide if adding this protection is right for you.

In a nutshell, it pays to know where your policy stands on these issues before they may occur. Talk to your insurance agent about the risks, the costs, and what your current protection covers and excludes.