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QUESTION: Does the insurance coverage for mold, should be the same as the home replacement value, if you live in Florida?


ANSWER: This is not straightforward. In the majority of cases, mold is caused when there’s an uncontrolled amount of moisture in the home. This can come from outside when rainwater comes through the roof or flooding comes in through the doors, it can be the result of leaking pipes or a dishwasher, or it can simply be high humidity. So the first step is to identify the cause. Now you need to look very carefully at the wording of your policy. Water damage has recently been the subject of considerable debate and the wording of policies has been changing rapidly as more rain as fallen and wind speeds have increased.

The bad news is most homeowners policies exclude liability for damage caused by mold and fungi if the source of the moisture is long-term. In other words, the insurer considers this a failure on the part of the homeowner to maintain the home. But if there’s a single event that releases moisture into the home and this is the cause of the mold, you may have a claim. It will all depend on the wording of the terms and any relevant exclusions. Look for wording that covers water-damage. Most insurers include treatment for resulting mold but, in many cases, the amount you can claim for that treatment is capped.

The answer is different, of course, if you bought special mold cover because you live in a high-humidity area. The cost tends to be relatively low for new homes because the drywall and other materials should be mold-resistant, but premium rates rise rapidly for older property. Since the question mentions Florida, an add-on is almost always necessary because this is a high humidity state. Even with the add on, claims are limited and will never represent the value of home replacement unless the owner has been paying a Rolls Royce premium rate.


QUESTION: Does flood insurance cover sink holes caused by underground water?


ANSWER: Sinkholes are geological movements that can disturb the foundations of insured homes. In those states where the local geology makes sinkholes more probable, they can be included in your homeowners insurance policies. Sometimes, this inclusion is automatic. Read your terms to see whether this is part of the cover. If not, you must negotiate for the cover to be added to the standard policy as a special endorsement. However, this approach is changing where the number of damaged properties is rising fast. So, for example, private insurers in Florida are now beginning to refuse cover and the lawmakers may be about to make it more difficult to claim. This is going to leave the states where sinkholes are a real problem with the decision whether they should offer a state insurance plan. This would match the federal provision for flood insurance in that the taxpayers would pick up the bill for any losses where the payment of claims exceeds the amount of premiums collected.

To answer your question directly, flood insurance under both the current federal and private cover does not cover any damage to your home that might be caused by sinkholes. To give you the right to claim, the cause must be proximate. A flood is water damage to your property, not a hole opening underneath the property. If the hole is caused by the level of groundwater dropping, this is one step removed from the cause of the damage. The most proximate causes are the suBsequent drying of the ground and the collapse of the ground where the clay base is at its weakest. So your only claim is under your homeowners or commercial property policy if you have the appropriate terms in place.


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