Not all water and mold damage is covered by your residential property insurance policy.
Most of the homeowner's insurance policies sold in Texas are known as HO-A policies. In general, HO-A policies only cover sudden and accidental water leaks and do not cover damage resulting from continuous or repeated leakage. Many do not cover remediation of mold; those that do generally have a cap on coverage.
CLUE Database and the Effect of Filing Claims
Some homeowners who have filed claims for mold or water damage later experience difficulty in renewing or obtaining new insurance coverage for their homes. Contact the Texas Department of Insurance (TDI) for possible assistance if you have difficulty finding an insurer.
Comprehensive Loss Underwriting Exchange (“CLUE”) is a national database that tracks claims filed on properties. The database tracks both the claims history of your house and on claims filed a homeowner. In general, property claims filed with insurers are recorded in the CLUE database. In some cases, insurers may have reported inquiries about how to file a mold claim, even when no claim was made. Home buyers may request a building's CLUE report. Claims on your property may prevent potential buyers from obtaining homeowners insurance. This in turn may limit your ability to sell the property. Therefore consider carefully whether to file repair claims on your home.
Under federal law, you can challenge incorrect information in your CLUE report. If you are denied homeowners coverage because of a CLUE report, you are entitled to receive the report free. Contact the Equifax Insurance Consumer Center at (800) 456-6004. You do not have to report mold problems to your insurance company if you pay for the remediation. However in order to accept a claim, your policy may require you to report water damage to your insurance company within a set time (generally 30 days) after you discover or should have discovered the damage.
Making an Insurance Claim
In general, your insurer must begin an investigation within fifteen days after you file a written claim. The company may ask you for more information, and has another fifteen days after you send the information before it must accept or reject the claim. If the company agrees to pay the claim, it must do so within five days. If the company rejects the claim, it must give you the reasons in writing.
It is common for an insurance settlement check to be made out to both the homeowner and the mortgage company. Some mortgage companies will endorse the check to the homeowner, leaving the homeowner to arrange for remediation. Otherwise the lender usually uses the insurance checks to pay the contractor, with an inspector monitoring the work and releasing payments. Consult with your mortgage company about how involved it will become with the remediation work. If the company oversees the work, you should still understand who is responsible for ensuring the job is done properly, and the extent of your liability. Remain active in this process.
Remediation is more than just repairing damage caused by mold. It involves the process of evaluating the situation before repair work begins. It also involves removing and cleaning items contaminated with mold, treating potentially affected areas, and ensuring that mold does not reoccur.
Choosing a Mold Assessor and Remediator
All non-exempt mold assessors and remediators must be licensed by the Texas Department of Licensing and Regulation (TDLR). Be wary of possible conflicts of interest on the part of companies that provide multiple services. A person may hold licenses, but may not do both jobs on the same project. In addition, a person may not own an interest in both firms that do the assessment and the remediation on the same project.
Keep in mind there are exceptions to the licensing requirement.
Review all bids with your insurer to determine which costs will be covered. If your lender is involved in the process, make sure the bid specifics and payment schedule meet the lender's requirements.
Check with TDLR to see if the contractors are properly licensed, and whether any complaints have been filed. Also do your homework on the company’s reputation.
Some insurers may have a list of recommended mold specialists, but you must choose the contractor. Your insurer is prohibited from requiring you to use a specific company, but may assist you with your selection and with getting remediation work done in a timely manner.
After the contract is signed, licensed remediators are required to give you a Consumer Mold Information Sheet prepared by TDLR.
Under state law, a mold assessment must be done before remediation begins. Check your insurance policy to see if the remediation settlement should include the assessment cost.
The assessor must prepare a work analysis for each project, and give the client a copy before remediation begins. The analysis must state:
- which rooms or areas are to be worked on;
- the quantities of materials to be removed or cleaned onsite;
- the proposed method of remediation for each area; and
- the proposed clearance criteria for determining when remediation is complete in each area.
The licensed remediator must then produce a plan with instructions for each aspect of the project. The remediator must give the owner a copy of the plan before work starts, and keep a copy at the job site. The remediator must also notify TDLR about the project at least five days before work begins, except in emergencies.
Within ten days after completing remediation work, the remediator must give the property owner a certificate of mold remediation. The certificate must include a statement from a mold assessor that the contamination has been remediated in accordance with the clean-up plan. The certificate must also show if they fixed the underlying cause of the mold. Remember that the certificate only applies to mold removal - it does not cover other types of water damage repair.
Remediators must keep a record of all jobs they did over the last three years. This record must include before and after photos of the contamination scene, the written contract for remediation and all job related invoices. The remediator is required to give the homeowner a copy of all photos included in the project record.
Property owners should keep copies of the mold assessment, remediation contract, remediation certificate, photos and other related materials on file. If owner sells the property, he or she must give the buyer a copy of each remediation certificate issued on the property.
The process above does not apply to the following actions, when not done specifically as part of a mold assessment/remediation:
- routine cleaning
- real estate inspections
- repair or replacement of plumbing, ventilation, heating and air conditioning, electrical systems, air ducts or appliances
- use of construction materials during the building phase of raising a structure
Questions and Complaints
If you have questions or complaints about the license status of a mold assessor or remediator, contact TDLR. Call (800) 803-9202 for more information.
We also accept complaints against mold assessors and mold remediation contractors, including matters related to warranties. You may also want to discuss the matter with a private attorney.