Burst Supply Line, Hidden Mold, and a Two-Year Dishwasher Leak
The Kellers have an HO-3 on a 1998 colonial: Dwelling A $420,000, Coverage C $210,000, Coverage D $84,000, a $2,500 deductible, and the limited fungi (mold) endorsement with a $10,000 limit. In February, while the family was away for 11 days, the braided supply line to the upstairs washing machine failed and water ran until a neighbor noticed. Water soaked the first-floor ceiling, a bathroom subfloor, and about 600 square feet of oak flooring. Three weeks into repairs the contractor finds mold behind the wet drywall. Separately, the Kellers mention the dishwasher has leaked slowly for two years, softening the kitchen subfloor, and that they replaced the kitchen floor last spring at their own expense. Building repairs run $58,000, mold remediation $14,000, and the family paid $3,900 for a rental over seven weeks.
1. Calculate what the policy pays for the burst-line loss, applying the deductible, the mold limit, and Coverage D.
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The burst line is a covered peril - accidental discharge from a plumbing system. Payment:
| Item | Amount |
|---|---|
| Building repairs | $58,000 |
| Mold remediation (billed $14,000, capped at $10,000) | $10,000 |
| Less deductible (once per occurrence) | ($2,500) |
| Property payment | $65,500 |
| Additional living expense, 7 weeks rental | $3,900 |
| Total | $69,400 |
Key points:
- Mold is limited, not eliminated. Tear-out needed to reach the wet wall and dry the structure is part of the covered repair, not the mold sublimit.
- The dwelling is replacement cost, so there is no depreciation on the oak flooring - but the carrier may hold back depreciation until repairs are actually completed.
- Coverage D pays the necessary increase in living expenses, not the whole cost of living elsewhere; receipts and a comparison with normal expenses are required. $3,900 is well inside the $84,000 Coverage D limit.
- One occurrence, one deductible - the ALE payment does not take a second deductible.
2. What happens to the slow dishwasher leak and the resulting rotted subfloor and mold?
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No coverage, and the mold goes with it.
- The policy excludes constant or repeated seepage or leakage over a period of weeks, months, or years. A two-year leak is the textbook case.
- The mold that results from an excluded peril is also excluded. The "ensuing loss" argument only rescues damage from a new, separate, covered peril - it does not convert excluded seepage damage into a covered loss.
- The earlier floor replacement was the Kellers' own maintenance decision; deterioration/wear and tear is excluded, and paying for it out of pocket does not pre-fund a future claim.
- The carrier still owes the duty to mitigate discussion: had the Kellers reported the leak when it began, the current damage would be smaller. Failure to mitigate does not create coverage, but it can affect any goodwill payment.
Handling note: investigate the dishwasher claim separately, document the denial in writing with the exclusion language, and do not let the two losses blur together in the file. Advise the Kellers to repair the supply line and consider a water-leak detection device, which many carriers discount.
3. The contractor wants to tear out and discard the wet drywall and flooring before the adjuster inspects. How should the claim be managed?
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Mitigation and documentation have to run together.
- The insured must protect property from further damage, and drying/tear-out is legitimate mitigation - the contractor should not be told to wait while mold spreads.
- But document before disposal: photos and video of the wet materials, moisture readings, a sketch of the affected area, and samples where the cause is disputed. Once the material is in a dumpster, the cause-and-origin question becomes a fight.
- Have the contractor separate the estimate into covered water damage, access/tear-out, mold remediation, and any upgrade to code - the carrier pays only the covered columns, and a single blended invoice invites a dispute.
- Preserve the failed supply line; it supports the sudden-and-accidental finding and may support a products claim against the manufacturer (subrogation potential).
- Confirm scope and pricing with the adjuster before the bulk of the work proceeds, and get written approval for any betterment.