Mold Damage Insurance Claims

Insurance policy exclusions or limitations

Most residential and business insurance policies have exclusions or limitations for property damage relating to mold or long-term water intrusion. Policyholders faced with a mold problem should expect that their insurers will assert countless arguments in an attempt to defeat coverage. These arguments may be unfounded. A policyholder must be both diligent and persistent in the claims process or risk losing coverage that otherwise would be available.

Mold damage claims are complex, because of the mold exclusions or limitations in most insurance policies. When our clients ask us for help settling a mold damage claim, our first priority is to investigate whether the mold damage can be linked to water damage for which a claim may be made under the insurance policy.

If the mold took hold after a pipe burst or after water intrusion due to rain, then the mold damage claim may be tied to water damage, in which case we can make a strong argument that the mold exclusion should not apply.

Critical Steps to Maximize Insurance Coverage for Mold

• Understand the facts and the nature of the mold damage/liability. Take mold damage seriously and hire an expert to determine the cause of the mold and whether it occurred gradually over long periods of time.
• Review the policy provisions carefully. Read your insuring agreements and exclusions carefully. Understand your deadlines for submitting claims and proofs of loss and for filing suit. Understand your policies’ suit limitations provisions, which can involve deadlines materially shorter than those in statutes of limitations, and understand whether appraisal, arbitration or other alternative dispute resolution is required before litigation.
• Give written notice to all implicated insurers as soon as you are aware of a potential claim. Err on the side of giving notice, even if a policy arguably does not apply. Many valid insurance claims have been lost because there was late or no notice of the claims.
• Keep a record of all insurance notice correspondence and claims-handling communications. Document all oral conversations with your insurer and keep records of activities undertaken by your insurer, including dates, the names of insurer representatives involved, requests for follow-up information and so on. Be diligent and persistent. If you end up in litigation, you will want a clear record of the insurer’s handling of your claim. Such a record may lead to a bad faith claim against the insurer.