Hold the Mold

by Mark Goldwich

If you are like me and many other people I know, you have been suffering from allergies due to especially high pollen levels. It is amazing how much aggravation those tiny little spores can inflict on people, especially if they are sensitive to it, as I am. While I usually like to be outdoors and enjoying the sunshine and fresh air, lately I just want to be in my home or office, windows shut tight, breathing nice stale air with minimal pollen.

Knowing there had to be a way to relate this to insurance claims, I quickly realized mold is a lot like pollen – itty bitty spores floating around when the environmental conditions are just right, wreaking havoc on those people who are most sensitive, and those items that are most difficult to get mold out of.

Image courtesy of blackmoldrepair.com

Mold damage to domestic and commercial properties can be both extremely dangerous from a personal health perspective and quite expensive to repair - far more expensive to repair than a lot of property owners realize. Especially if it’s that black mold we keep hearing about with the scary name - Stachybotrys chartarum. This variety of mold has been known to cause illnesses including brain damage, and has also been said to be linked to “sick building syndrome”.

Not surprisingly, perhaps, the insurance companies have not only figured out how much this kind of damage can cost ... they have also figured out how to avoid paying for the majority of the damage in the most severe cases.

Like most things, it used to be a lot simpler. In the situation where you have a sudden major loss that is covered by your policy and mold quickly ensues as a result of that loss, then historically, what has happened is that the policy simply kicked in to cover the damages. Whatever the insurance company had to pay to repair your property was simply what it would pay, whether it was a little, or a whole lot.

Courtesy of blackmoldmichigan.com

I actually had a claim just a couple of years ago where a couple had what was deemed a covered mold loss, and the insurance company ended up paying something close to a quarter of a million dollars – a huge amount – especially when compared to the $8,200 the insurance company offered before I got involved. Of course, that was what the couple had been paying healthy premiums for years to be protected from: that huge repair bill.  

Nowadays, that simple outcome is much less likely to happen, at least in my state. In almost every policy in the state of Florida, you will find something called a "mold endorsement." This is a very tricky piece of policy wording. Why do I say "tricky?" That’s because normally, an endorsement is something that gives you additional coverage within your policy above and beyond the boilerplate language. This passage is tricky because it leads you to expect you are getting coverage that you're not.

The policy seems to give you extra coverage for mold, but actually, under this endorsement, that coverage is severely limited, typically to a maximum of ten thousand dollars. That may sound like a lot of money if you've never been through the process, but as the experience of those homeowners I worked with a few years back suggests, it really isn't.

Notice once again what has happened here. The industry is not cutting your premium by 90% because you're suddenly getting a tenth of the coverage on mold damage that you might have imagined you were getting when you first became a customer. It's simply reducing your coverage by 90% and calling it a day.

Image from dreamstime.com

If we went to the supermarket, and found we had to pay the same amount for a gallon of milk that we had to pay last week … but then realized, as we put our groceries away, that the gallon container only contained a cup of milk … we might have cause to complain to the state consumer protection authorities. And we certainly would have cause for complaint if we noticed that every single provider of milk in the state had executed the same “adjustment” at roughly the same time! In such a situation, it would be very hard to believe that the local and national news outlets wouldn't devote heavy coverage to such an “adjustment,” and it would be hard to imagine, too, that politicians and regulators would sit still for such abuse of the consumer.

But this isn't milk we're talking about. It's insurance. It's not something you pour on your cereal. It's your ability to restore your life, your home, and your family after a disaster. So no one pays much attention. Except the individual consumers who find out the hard way that they have a problem.

The problem is that most homeowners a) don't know that ten thousand dollars may not be close to  solving a mold remediation problem, and b) would probably never bother to check the language anyway. So what has the industry done here? It has simply decided that it was paying too much on completely legitimate mold claims ... and found a way to pass the vast majority of the costs to repair the most serious cases on to consumers who don't know any better. The insurance companies needed no legal authorization to do this. They simply put it into their agreement, called it an "endorsement," and made your life significantly more difficult and expensive when the time comes to deal with the mold problem. Here again, we have a situation where you need a professional review of your policy before you sign on the dotted line, especially before you accept a claim settlement.

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I certainly hope this has enlightened you a little bit about mold endorsements. But, there is actually a whole lot more on the topic of endorsements that you should know about – maybe next time! Just remember, when it comes to mold, or endorsements, or anything insurance claim related, don’t assume the insurance company is on your side, and don’t accept what they tell you as the absolute truth. Seek professional help … just as you would for severe allergies.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.