Property damage caused by mold can be a real problem – especially here in Florida. The combination of Florida’s humid climate and often rainy weather create the perfect petri dish for the creation and growth of toxic and damaging mold. Fortunately, most homeowner’s insurance policies provide coverage for the damage caused to your property by mold. Unfortunately, the coverage provided by most policies is extremely limited. Up until a few years ago, damage caused by mold was covered under Coverage A of your homeowner’s insurance policy. Coverage A of your policy provides coverage to the main structure and sets forth a policy limit which, at least in theory, is related to the replacement cost of your entire home. A few years ago, the insurance industry lobbied for and were allowed to alter their policies to include the following language:
Fungi, Wet or Dry Rot, Yest or Bacteria.
a. We will pay up to $10,000 for:
(1) The total of all loss payable under Section I – Property Coverages caused by “fungi”, wet or dry rot, yeast or bacteria;
(2) The cost to remove “fungi”, wet or dry rot, yeast or bacteria from property covered under Section I – Property Coverages;
(3) The cost to tear out and replace any part of the building or other covered property as needed to gain access to the “fungi”, wet or dry rot, yeast or bacteria; and
(4) The cost of testing of air or property to confirm the absence, presence or level of “fungi”, wet or dry rot, yeast or bacteria; whether performed prior to, during or after removal, repair, restoration or replacement.
The cost of such testing will be provided only to the extent that there is a reason to believe that there is the presence of “fungi”, wet or dry rot, yeast or bacteria.
Now – what does all that mean? There are two kickers to this policy language. First, no matter how catastrophic your damage is or how high the cost to repair – your policy will only provide coverage for up to $10,000 for these repairs. Secondly, the insurance company can deduct from this limit the amount the insurance company spent initially investigating this loss! In other words, if mold caused $50,000 worth of damage to your home and, upon contacting the insurance company, the carrier spends $2,500 investigating the existence of the mold damage and calculating the amount of the loss, you would only be provided coverage for $7,500 to repair your home ($10,000 coverage minus $2,500 investigation expense incurred by carrier). You would then be on the hook for the remaining cost of repairing your property.
Although the mold coverage available under your homeowner’s insurance policy may be very limited, there may be other portions of your policy which may provide coverage. Therefore, it is important to seek legal advice from an attorney with experience with water and mold claims in order to best protect your rights.