PLGeorgiahard
A Georgia homeowner discovers extensive mold growth behind a wall following a covered plumbing leak. The HO-3 policy contains a $10,000 mold sublimit endorsement. Which statement best describes how the insurer should adjust the loss?
AThe entire mold loss is excluded because mold is never covered
BThe full mold loss is paid because it resulted from a covered peril
CThe insurer must pay both the mold and water damage up to Coverage A with no sublimit
Mold is capped at $10,000; the water damage is paid to policy limits
Why this is the answer
On a Georgia HO-3 with a mold sublimit endorsement, the insurer separates the loss into two buckets. The water damage from the covered plumbing leak (covered under the HO-3's open-perils dwelling coverage) is paid up to applicable policy limits as a normal Coverage A claim. The resulting mold damage and remediation costs — testing, containment, removal — are subject to the $10,000 mold sublimit, regardless of total cost. The endorsement caps the insurer's mold exposure while preserving the underlying water-loss coverage.
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