By Steve Jenney
Having worked as a restoration professional and as an insurance adjuster for the past 30 years, I have seen the industry change with regard to insurance coverage.
Homeowners still have fires, they incur water damage from all sorts of avenues, homes get vandalized, and we still have major storms happen throughout the year. The emergency response and cleanup, as well as the required repairs due to these perils, has changed a little with modern technology but the end is the same − putting your house back to a home.
I have noticed that often, homeowners do not have any coverage for certain types of damage or have limitations in the coverage for the damage.
In speaking with most homeowners, they assume that when any damage happens at their home, they can call their insurance company and everything will get fixed, less their deductible.
This is not always true, and in many cases it is far from the truth. This can be remedied by making sure to read and understand your policy, before something happens. Insurance companies and agents send you a renewal each year updating your insurance policy and costs. Many of us just agree and start making payments – but if you take a few moments to fully read your policy, and ask your agent to clarify anything you don’t understand, you will be better prepared to face any damage that occurs.
There are certain types of damage, such as mold, that can cost homeowners a great deal of out-of-pocket expense. Mold became a big issue in the insurance industry in the late 1990s–early 2000s from the Ballard case in Texas. This case changed how the coverage is now written in your insurance policy. Many insurance policies now have some coverage for the cleanup of mold/rot/fungi, however some companies have mold exclusions that give no coverage at all. The companies that allow or add this coverage to your policy have basic limitations. Many times, this limit is $10,000 per calendar year. First of all, the coverage for the cleanup must be for something you already have coverage for, i.e., from a burst pipe, roof leak, hidden rot, etc. You usually won’t have any coverage if the humidity in the basement causes mold and you don’t operate a dehumidifier, or if you don’t have a bathroom fan and the steam over time causes mold.
If you are lucky enough to have coverage for the cleanup, the costs associated with the cleanup can, in many cases, be more than your coverage. Some insurance companies want the homeowner to get a mold test or inspection to prove there is mold and that cleanup is required.
Some mortgage companies (since they are listed as an additional payee on most dwelling insurance payments made to you) want a clearance test after the cleanup to be sure the cleanup was done correctly. This is good practice to make sure the restoration company did their job, however, these test come with a cost. I have seen an increase in these costs over the years.
For a Cape-style house, you could pay $750 to $1,500 for each test, based on how many areas in the home get tested and how many samples are sent to a lab. If you end up having a pre-test and a post-test, you could be spending upwards of $3,000 from your total $10,000 coverage − now leaving $7,000 for the actual cleanup. The protocol given to the restoration company must be followed. This could include some removal of building components such as wallboard, cleaning with HEPA filtered vacuums, cleaning of surfaces with a disinfectant, and “polishing” the air with a commercial HEPA filtered air cleaner for a few days. In many cases, this cleaning process for a moderate mold cleaning could cost well over $10,000, and the homeowner will be responsible for the overages. The good thing is that many insurance companies will allow you to buy additional coverage over what they are giving you in their standard policy.
I strongly recommend that all homeowners read their policy carefully − and don’t hesitate to ask your agent to explain the coverages you have and coverages you may want to add. It’s crucial to understand what you are paying for and what you get if the insurance is needed – and what the extra costs are for additional insurance.
You will be very surprised at the small amount it can cost to add additional coverages to your homeowner’s policy – all the better to protect your home.
Steve Jenney is President and CEO of Oceanside Restoration Inc. He can be reached at firstname.lastname@example.org or (800) 464-3318.
This article was published in the March 2017 issue of Cape & Plymouth Business.