There are some things that no one wants to find in a rental property. These include mice scuttering across the kitchen, bed bugs and mold. Mold is not only ugly, but it can also cause serious breathing difficulties if you're exposed for too long. Bleaching and scrubbing won't get rid of it so you'll need to bring in the experts to clean the affected areas. You may need to move out while the mold is being treated, and this means incurring an additional housing expense. As to whether your insurance company will pay for the relocation, well, it's complicated.
A renters insurance policy should pay for damage to your personal property if the mold was caused by a peril for which you're covered such as water damage or a leaking roof. But you'll only get a relocation payout if the policy includes relocation coverage.
Does Renters Insurance Cover Mold?
Mold is a gray area in the insurance world. Most standard renters policies will fork out if your personal property is damaged by mold, but only if the mold itself was caused by a peril you're covered for. The list of the perils that most renters insurance policies cover include:
- Fire and smoke damage.
- Lightning, hail or windstorm.
- Damage caused by aircrafts.
- Riots or civil disturbances.
- Damage caused by vehicles.
- Falling objects.
- Damage from the weight of snow, ice or sleet.
- Water damage from plumbing, heating, or air conditioning overflow.
- Pipe freezing.
In other words, if a pipe bursts and the leaking water causes mold to grow up the walls, then you're probably going to be covered. The same principle applies to wind damage – mold can grow in the spaces where roof tiles and siding are damaged.
What Will the Insurance Cover?
A standard policy covers damage to your personal property. This means that if the mold damages your stuff, the insurance company will pay to repair or replace it. But to reiterate, this will only happen if the mold was caused by one of the previously named list of perils.
Since mold is so pervasive – and destructive – many insurers add significant limitations to the coverage. Your policy may limit the amount you can redeem for mold damage, for example, by imposing a claim limit of $5,000. The policy may cap certain objects, like jewelry, electronics and instruments, at a couple thousand dollars anyway.
Some policies might exclude mold insurance claims entirely, so be sure to check the fine print.
What About Tenant Relocation Due to Mold?
Relocation expenses are a different matter. If you need to relocate, the renters insurance will give you some money to cover your temporary housing, but only if the policy includes relocation coverage. Some policies will include this, while others will not. The ones that do are generally more expensive. So if you went for the cheapest option, you could be out of luck. Read the policy!
If you do have relocation coverage, then the insurance company will take care of your relocation expenses if the mold remediation forces you to move. However, there are limits. The policy might pay for you to stay in a hotel room or another rental until the mold is treated, but you won't get a blank check. There likely will be limits on the amount you can spend per night, week or month, so don't expect to book into a 5-star hotel.
Do I Have to Move Out?
Insurance companies are not in the business of paying out claims that are unnecessary. If only a small area of your home is affected, then you can probably remain in full occupancy while the mold is remediated. More extensive remediation work – including work that puts your bathroom or kitchen out of use – may make continued occupation impractical. There's a spectrum, and it's up to the remediation company to tell you how big the job is, whether you can stay in occupation and how long the job will take.
This can lead to some interesting negotiations with the insurance company. It's understandable that you don't want to stay in a property full of mold spores, especially while chemicals are being sprayed around. However, only a handful of states (California, Indiana, Maryland, New Jersey and Texas) have established permissible mold standards, making it difficult to say with any certainty how bad the mold must be before it forces a relocation.
The insurance company likely will want a report from a professional remediation company before it agrees to pay your claim. If the remediators are confident they can work around you, then you may struggle to get a relocation payout. And if the remediation company says you only have to move out for two days, then that's the maximum hotel stay you'll be permitted to claim.
When Renters Insurance Does Not Cover Mold
There are many situations when a renters policy will not cover you for mold damage. For example, you generally purchase a separate flood insurance policy and/or a sewerage system endorsement to get a payout for these risks. If you have these policies, your renters insurance will not cover mold resulting from floods from heavy rains, a storm surge or overflowing sewage.
Mold will not be covered if it was caused by your own negligence. An example would be if you never ventilated the apartment or you left a pile of wet towels in the corner of the bathroom, allowing mold to grow. If it looks like you caused or worsened the mold, then you can expect the insurance company to deny the claim.
Duty to Mitigate Damages
There's something else you have to do before the insurance company will pay your claim, and that is to show that you have mitigated your damages. That's legalese for stopping the damage (and therefore the repair cost) before it gets any worse. The general rule is that your renters insurance policy will only pay out to the point where you could have prevented the mold damage from getting worse.
In practical terms, if areas are wet, then you should make efforts to dry them. Report any leaks, damp and mold to the landlord immediately and keep pushing the landlord to do something about it. If you ignore a minor problem and it gets so bad that you have to move out – whereas prompt action could have prevented the relocation expense – then you may not get a relocation payout even if you have relocation coverage.
Renters Insurance, Mold and the Landlord
No matter what the insurance policy says, there's another person to consider in this scenario and that's your landlord. Renters insurance is only intended to cover your personal property. Mold caused by the defects in the structure of the property, such as a leaking roof or pipe, is the landlord's responsibility to remedy.
While state laws vary, the landlord has a legal responsibility to provide safe and habitable housing. If the landlord fails to fix a serious mold problem, then you have legal options such as rent withholding or fixing the problem yourself and deducting the cost of the mold remediation from the rent payment. The actual remedy depends on state law. You might even be able to demand compensation for mold-related health problems – and that includes your relocation costs if the mold endangers your health.
The bottom line here is that mold insurance is a bit of a minefield. It's best to work with your landlord and your insurance company as soon as there's a problem that could lead to mold damage. If you decide to go down the route of suing the landlord, it's essential you get legal advice to confirm you have a strong case.
Jayne Thompson earned an LLB in Law and Business Administration from the University of Birmingham and an LLM in International Law from the University of East London. She practiced in various “big law” firms before launching a career as a commercial writer. Her work has appeared on numerous financial blogs including Wealth Soup and Synchrony. Find her at www.whiterosecopywriting.com.