Insurance companies like to leave you feeling relieved with the belief that any significant damage to your home will be covered by your plan. Buried in your policy, however, are a multitude of exceptions your insurance company relies on to avoid coverage. One issue we have seen come up many times is the family who is shocked to learn their insurer will not cover mold and water damage due to a leak. This kind of damage can be extremely expensive. Mold removal and repair can take weeks or even months, leaving a part of the house completely uninhabitable.
To avoid the shock of being told by your insurer you are on your own, it is important to do and know a few things. First and most foremost, take the time to read your policy. Policies vary significantly, so it is vital to know what your policy includes and excludes. Many policies exclude mold damage of any kind. Some policies cover mold, but cap the amount of coverage that will be paid. Policies also typically exclude water damage due to a leak that has been ongoing for a significant period of time. Some policies cover ongoing leaks, but only if the owner reports it timely once it is discovered. It is the insurer's burden to make the policy clear. If the language is vague or ambiguous, courts routinely favor the home owner when interpreting what it's supposed to mean.
If these things are not covered, ask your insurer if modifying your policy to include them is possible, or see if there is another company out there that offers it. It will likely cost more to expand the coverage, but from personal experience paying a little extra for good water and mold coverage is worth eliminating the risk of receiving a hefty bill.
If you have not read your policy, do end up with damage and have an insurance company telling you there is no coverage, do not fret just yet. Insurers are often guilty of denying a claim simply because they know the customer will not look into it further or do anything about it. Ask the insurer for a copy of your policy and look it over. Demand that the insurer provide a written denial of the claim, citing the exact policy language they are relying on for their denial. If things are not adding up, consult with a lawyer if necessary.
If the mold arose from a recent leak, your insurer may have to cover both due to the initial cause of the damage: sudden water. If your insurer is denying the claim by arguing the leak was ongoing, make sure they provide you with all the evidence they have to support the claim that the leak had lasted longer than what the policy covers. Make sure the policy language is clear regarding what "ongoing" means: is it the length of time the leak lasted, or is it the length of time you discovered the leak and allowed it to continue before reporting it? If the language is unclear, you might have a viable argument against the insurance company.
If the insurer sent out an expert to look at the damage and render an opinion, it might not be a bad idea to hire someone independently to give an opinion of his or her own. It is not uncommon for the expert hired by the insurer to render the opinion the insurer wants to hear.
Additionally, some insurers want a breakdown of what percentage of repair had to be done due to mold vs. what percentage of repair had to be done due to water. Though this is kind of like asking what percentage of the log got wet because it was soaked in water vs. because it was thrown in a pool, this is an accepted practice when determining what amount of coverage should be allocated to water damage vs. mold damage. Because mold damage is usually covered less or not at all, insurers prefer the mold damage percentage be higher than the water damage. Again, it is important to ensure the company that has been hired to make these evaluations is making them fairly, reasonably and independently.