Are Insurance Companies Discontinuing Mold Coverage?

Ever since Melinda Ballard successfully sued her insurance company for $32 million for not repaying mold damages covered by her insurance policy, there has been a constant struggle between home owners and their insurance companies regarding who is responsible for paying for mold damages and remediation – with the only real winners being the lawyers who dispute these high profile cases.

But now it seems that more and more insurance companies are throwing in the towel and simply dropping any kind of mold coverage altogether to avoid the giant lawsuits. First it was simply adding clearer language to policies, explicitly stating when the insurance covered mold and when it did not. Now, many companies are nixing any coverage whatsoever to avoid the costly legal drama that has filled our courts over the last decade.

The largest home insurer, State Farm, has eliminated coverage for mold in 33 states. State Farm used to cover mold if it was the result of a storm, flood, or other Act of God, but there is too much gray area in these cases. Irresponsible home owners could easily allow minor flood damage to turn into enormous mold damages that State Farm would have to pay for. And how can you distinguish between mold resulting from a flood and pre-existing mold anyway? These are the questions that tie up the courts and rack up the legal fees.

Allstate, the second biggest home insurer, added language to clarify that it doesn’t cover “mold, fungus, wet rot, dry rot, or bacteria” unless the problems originate from events already covered by the policy. And even when it is covered, the costs are limited to $5,000 – a lot less than Melinda Ballard’s $32 million settlement. Safeco Corp put a $10,000 cap on their mold coverage.

There are still insurance companies left who will pay for mold, but at the cost of very high premiums. Mold is just a too expensive problem where, unlike a fire, it is too difficult to accurately recreate how it occurred over months or years and who is to blame.

The best insurance you can get is the knowledge to be aware of how to keep mold from growing in your home and how to eliminate it if it does. Knowledge goes a long way, educate yourself on mold removal methods and learn how to protect your home and family from mold.

Tagged as: act of god, Allstate, flood damage, fungus, insurance companies, insurance company, insurance policy, melinda ballard, Mold Removal, safeco, safeco corp, state farm