Will My Homeowners Insurance Cover Flood and Mold Damage?

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Co-Authored by Wayne Stock of Stock Environmental and Ken Scaggs of The Kerr Agency.

Purchasing a new home is an exciting experience for many, especially first time home buyers. Thoughts about the potential for damage to your home are often not in the forefront of your planning during the home buying process. You know you’ll need home owners insurance, and assumptions may be made that you’ll be covered in the event of damage, like flooding. It is prudent for every home buyer to understand exactly what their homeowners insurance policy covers in the event of flood and mold damage, and how.

In the course of a mold inspection after a flood, I discovered significant damage to asbestos-containing floor tiles. Unfortunately, the homeowners insurance covered the mold remediation but not the asbestos.

This month we’ve partnered with The Kerr Agency to help explain what may be covered in a typical homeowner situation and what may not. Read on.

There are several things that you may not think of when buying a new home. You get a home inspection done and you think everything is good to go. You’re excited and can’t wait to start this next chapter.

There is only so much that a home inspector can look for and for that matter, is qualified to look for. We don’t consider things like mold and asbestos. Wait, why wouldn’t the home inspector tell you about ASBESTOS!?! Most likely because they don’t always know what to look for or can’t be one hundred percent certain that it is or is not asbestos so they don’t say anything. The same may go for mold and fungi as well.  So often there are exclusions in the home inspectors contract and work related to environmental testing. 

So what happens when you’ve discovered one of these huge issues? You may turn to your homeowners policy for help. Well guess what? You’re highly unlikely to find it there. The HO3 (most common homeowners policy) either excludes it entirely or offers very little compensation for abatement or remediation. The most you’ll get without paying a substantial premium will be around $10,000. Now that may seem like a good amount but remember your policy probably doesn’t afford any coverage whatsoever and removal could cost significantly more than 10,000*.

Now let’s take mold and see where the HO policy would react for coverage. Let’s say you didn’t have any signs of mold prior to purchasing. A few months later a pipe in your kitchen bursts and water is everywhere. Shortly after that, mold is discovered. You’re likely to be covered in this instance since the mold occurred from the water in the burst pipe. Again, it all depends on what pipe and what your coverage states is a covered cause of loss.

We always recommend hiring an environmental inspection company along with a home inspector before purchasing a home. It definitely helps to use one after the fact as well. Early detection can save thousands of dollars if one of these environmental issues occurs in your home.

*Each scenario is different. These figures are an average taken from many different claims and should only be used as a guide for further conversation. Consult your insurance carrier or agent for your exact figures.”

The Kerr Agency offers professional liability advice, services, and solutions and specialize in customizing policies for our clients. Our goal is to protect your assets and manage your risks with the best possible program for you.

Stock Environmental is an environmental consulting firm servicing all of New Jersey and New York. If you have questions, or would like to schedule an inspection, give us a call at 732-383-5190 or e-mail info@stockenvironmental.com.

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