Knowing if Your Liability Insurance Covers Mold Remediation

2/10/2021 (Permalink)

Understanding What It Covers

As a business owner in Lake Charles, LA., you keep all of your insurance policies up-to-date. Even still, there are those unusual situations that give you pause: does my insurance actually cover that? You know that your general liability insurance covers slips and falls and property damage at a client's home, among other things, but what about mold exposure? Mold insurance claims can be tricky because mold is usually associated with water damage or a construction problem and therefore often falls under various exclusions in your coverage. It's unnerving if you don't know exactly what's covered versus what you might be responsible for. Here's what to look for in your general liability insurance policy to understand what it covers.

Exclusions

Common exclusions in your insurance policy include pollution exclusions and "business risk" exclusions. A mold claim doesn't have a guaranteed outcome because mold hasn't been consistently classified as a pollutant. There's a lot of variation between states when it comes to deciding whether mold falls under the pollution exclusion. Coverage is consistently denied to contractors if the claim is a result of defective workmanship unless the damage done by defective work has been incorporated into an existing building. How confusing!

Endorsements

Due to a lack of consistency surrounding mold insurance claims, many insurance companies have added endorsements to general liability policies that definitely exclude mold claims or at least limit coverage. One endorsement excludes mold remediation under all circumstances. However, since most mold is a direct result of water damage, which is covered, it's still not entirely clear how this endorsement impacts a mold claim.

Additional Policies

You can buy an additional policy that does cover mold; the challenge is that these policies are still fairly limited unless you're willing to pay a high premium.

The bottom line is that mold insurance claims are tricky because there is so little consistency surrounding coverage. Each time you renew, be on the lookout for changes to your policy to protect you and your business.