People across the country are becoming increasingly educated regarding the health risks associated with mold exposure. The insurance industry implemented many wording changes in the late 1990’s and early 2000’s after an increase of mold damage submissions in conjunction with covered water damage claims.
Insurance companies began rewording their policies to almost eliminate mold coverage. Fortunately for Californians, Insurance Code Section 530 provides:
An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.
The Insurance Code specifically protects consumers from insurers’ attempts to completely exclude coverage for mold-related losses that may be counter to California’s statutory laws and thus are against public policy.
Policyholders should make sure their adjuster is aware of insurance industry standards and the need to dry property properly to mitigate damages. Preventing additional losses with emergency removal of water and a proper dry-out should prevent mold that can result from a water loss. An insurance company’s lack of proper claims handling may be accountable or actionable as bad faith.