Financial Expert Marion G. Cuff, CFS ®: Mold: Are You Covered?

"Deadly mold invades home!" While this may sound like something out of a horror movie, many homeowners are concerned about health risks associated with infestations of toxic mold. And the insurance industry isn't taking the mold issue lightly either. Some insurers are excluding or limiting coverage, raising premiums, or even refusing to write policies in areas at high risk for mold-related claims.

What exactly is toxic mold?

Toxic molds are living organisms whose spores emit certain mycotoxins (toxic substances) or poisons. The toxic mold that has led to a dramatic increase in homeowners insurance claims and garnered a lot of media attention goes by the name of Stachybotrys chartarum or black mold. Stachybotrys chartarum has been found in all 50 states. Leaky plumbing, leaking roofs, and burst pipes can create the humid conditions conducive to the growth of mold. Even energy-efficient construction practices can contribute to mold growth--tight seals and insulation can make it difficult to get rid of moisture that is trapped in a building.

Is toxic mold dangerous?

Some researchers say that the presence of particular strains of toxic mold in a home, like Stachybotrys chartarum, can cause serious medical problems. There have been reports of individuals suffering pulmonary hemorrhage and memory loss as a result of toxic mold infestation in a home. However, according to the Centers for Disease Control (CDC), a causal link between toxic mold and these types of conditions has never been established.

That's not to say that mold can't have detrimental effects on one's health. Even mold that does not contain mycotoxins has been linked to respiratory ailments such as asthma and hay fever in certain sensitive individuals. And in addition to medical problems, a mold infestation can lead to a condition known as "dry rot," which if left untreated can result in severe structural damage to a home.

Is mold damage covered by homeowners insurance?

Most homeowners insurance policies (HO-3) specifically exclude damage caused by mold from coverage--unless the damage is the result of a covered peril (e.g., burst pipes) that fostered the growth of the mold. Under a standard policy, mold damage that results from a noncovered peril (e.g., a slow leak from a pipe or roof) is considered a home maintenance problem and is thus excluded from coverage.

Insurance companies have reacted differently to the influx of toxic mold claims. Some insurers have begun to exclude coverage for any type of mold damage, regardless of whether it is the result of a covered peril. Others have decided to cover mold damage resulting from a covered peril, but only up to a certain limit (e.g., $10,000). If you have questions about mold coverage under your homeowners policy, contact your agent or insurer for more information.

How have mold damage claims affected homeowners insurance premiums?

Many companies that offer homeowners insurance have also begun to raise their premiums in response to the rise in mold damage claims. In fact, states that have had a significant number of mold claims, such as Texas, Florida, and California, have seen a dramatic increase in homeowners insurance premiums, making it difficult for many homeowners to obtain affordable coverage. Some insurers have even stopped writing new policies, or have refused to renew existing policies, in states where mold-related claims are prevalent.

How do you know if your home has mold?

According to the CDC, you probably have a large mold infestation if you've seen or smelled mold in your home. If you suspect a problem, you may also want to check the following areas for mold growth:

• The backs of dry wall, wallpaper, or paneling

• The tops of ceiling tiles

• Roofing materials that are above ceiling tiles

• Walls behind furniture

• Inside ductwork

• Underneath carpets

• Inside walls that surround pipes

What to do if your home has mold

Regardless of whether the mold you have in your home is toxic, experts suggest that you remove it as soon as possible. Mold can grow in a short period of time--usually within 24 to 48 hours. The CDC states that most mold growth can be removed by thoroughly cleaning the affected area with a solution of bleach and water. However, some items that have mold damage (e.g., carpets, insulation, and wallboards) may need to be removed and replaced.

There are cases where a mold infestation is so large that a homeowner may not be able to handle the cleanup on his or her own. In these cases, it may be necessary for the homeowner to seek professional help from a mold removal and remediation company that specializes in the removal of mold growth.

Mold prevention

Mold problems usually are the result of water or moisture buildup in the home. Although you can never get rid of all mold or mold spores in your home, the key to preventing mold problems is to keep any wetness under control.

• Keep the humidity level in your home low--use an air conditioner or dehumidifier if necessary; fix the source of the water problem (e.g., leaky plumbing)

• Make sure your home has adequate ventilation (e.g., exhaust fans in the bathroom)

• Whenever possible, use mold-killing products when cleaning your house (e.g., bathroom cleansers with bleach)

• Use mold inhibitors in paints

• Do not install carpet in humid/wet areas (e.g., bathrooms, basements)

• Dry any water-damaged areas/items within 24 to 48 hours to prevent mold growth