From the insurance perspective, damage from mold, like rust, rot and mildew is specifically excluded in standard homeowners and commercial property policies. Mold contamination is covered under these policies only if it is the result of a covered peril. For example, the costs of cleaning up mold caused by water from a burst pipe are covered under the policy because water damage from a burst pipe is a covered peril.
But mold caused by water from excessive humidity, leaks, condensation or flooding is a maintenance issue for the property owner, like termite or mildew prevention, and is not covered by the policy. Most people routinely clean up mold before it grows large enough to become a hazard. Caught early, mold usually can be removed by a thorough cleaning with bleach and water.
While mold has been around for millennia, the number of mold claims submitted to insurers increased significantly. But if insurers are now going to be asked to pay claims for something that is not covered in the policy, the price of insurance will inevitably rise. Should the longstanding coverage exclusion for mold be eroded by jury verdicts or judicial interpretations, the basic premises on which the property insurance contract is based will be reversed, and the economic consequences will be severe. To prevent this, corrective action by regulators and legislators is being taken.
To avoid confusion, many insurers are now inserting clarifying language in their homeowners and commercial property policies. Some companies may decide to cover all mold claims and price the policy accordingly. Others may exclude mold, but offer an attachment to the policy, called an endorsement, that allows you to add the coverage. Still other companies may provide a tighter definition of what is and what is not covered. While some may prefer to create an absolute exclusion. Most major insurers have announced some form of restriction on writing water damage policies.