Scope Creep on a Mold Claim
A homeowner reports a burst supply line that soaked drywall and carpet in two rooms. The adjuster inspects and finds visible mold behind the baseboards in an adjacent closet. The policy covers 'sudden and accidental discharge' but excludes mold unless it results from a covered peril, and caps mold remediation at $10,000. The contractor's initial estimate is $28,000: $18,000 for water damage and $10,000 for mold. The insured insists the entire closet be gutted and rebuilt 'to be safe,' pushing the estimate to $41,000. The adjuster has photos, a moisture map, and the contractor's line-item estimate but has not obtained an independent causation opinion linking the closet mold to the burst line versus long-term humidity. The insured is threatening to hire a public adjuster and a lawyer.
1. What investigation steps should the adjuster complete before committing to a payment figure?
Read the worked answer
The adjuster should not pay the $41,000 demand yet. Needed steps:
- Causation - obtain documentation (moisture readings, timeline, photos, possibly an engineer/hygienist) to determine whether the closet mold stems from the covered burst line or from long-term conditions (which would fall outside coverage or into the mold cap).
- Scope validation - compare the contractor's line items to the actual damaged areas; 'gut and rebuild to be safe' is not covered scope unless necessary to remediate covered damage.
- Apply the mold cap - even if covered, mold remediation is capped at $10,000; confirm which line items count toward the cap.
- Document each decision and communicate interim status to the insured.
2. The insured demands the full $41,000. Draft the adjuster's reasoning for the payment position, addressing coverage and the mold cap.
Read the worked answer
Covered: sudden discharge water damage to the two rooms (subject to policy limits and deductible). The closet mold is covered only if causation ties it to the burst line; if so, remediation is subject to the $10,000 mold cap. The 'be safe' rebuild of undamaged portions is not a covered loss - indemnity restores covered damage, it does not fund preventive upgrades.
So a defensible position might be: pay validated water damage, pay mold remediation up to the cap if causation is established, and decline the non-necessary rebuild. The adjuster should explain the causation finding and cap in writing, invite the insured's evidence, and note that a public adjuster or attorney does not change the policy terms. Keep negotiating in good faith while documenting.