She Moved In. Mold Appeared. Here’s What Happened Next.

The following is a real home inspection claim from InspectorPro  Insurance’s archives. To protect the insured’s identity, all identifiable characteristics from this mold damage claim—including names
and associations—have been altered or removed.

Black spots. That’s what Janet saw on the bathroom wall while she was cleaning mere days after closing on her Louisiana home. The small, speckled dots looked like mold to her. But her home inspector, George, had performed mold sampling and indoor air quality testing a month earlier and found nothing. Could it really be mold in her house?

Janet called George, and his receptionist said he wouldn’t be available to return her call for a few days. After hanging up, Janet considered waiting to talk to her inspector, but only for a moment. What if The following is a real home inspection claim from InspectorPro  Insurance’s archives. To protect the insured’s identity, all identifiable characteristics from this mold damage claim—including names and associations—have been altered or removed.

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lack spots. That’s what Janet saw on the bathroom wall while she was cleaning mere days after closing on her Louisiana home. The small, speckled dots looked like mold to her. But her home inspector, George, had performed mold sampling and indoor air quality testing a month earlier and found nothing. Could it really be mold in her house?

Janet called George, and his receptionist said he wouldn’t be available to return her call for a few days. After hanging up, Janet considered waiting to talk to her inspector, but only for a moment. What if the spots were mold? What if there were more signs of mold in the home  than the spots she saw on the wall? And what if the mold made her sick? She’d gotten sick from mold exposure before, which is why she had a mold inspection in the first place. She wasn’t taking any chances.

Another Inspector Enters the Chat

One Google search and phone call later, and Janet had booked another home inspector, Brian, to perform another mold inspection. Brian identified mold on the bathroom wall, where Janet had seen it, around the HVAC registers, near the toilet tank, and on the ceiling of a second bathroom. 

Brian submitted his findings in a 12-page mold inspection report accompanied by a 20-page report from the environmental lab, confirming mold growth. Given the results of his home mold inspection, Brian recommended remediation, which he estimated would cost between $8,500 and $10,800.

A $30,000 Mold Surprise

Concerned for her health and safety, Janet and her family left their new home in Louisiana and moved in with family in Texas while remediation took place. They reached out to their original inspector, George, again and explained that another inspector had found mold in the house. 

The family believed George should have been able to identify the mold during his inspection. Because he’d allegedly failed to do so, they wanted him to pay for remediation.

Nearly two weeks later, Janet’s husband drove from Texas back to Louisiana to let George into the house for a re-inspection. A few days later, George called Janet asking to see the house again because he hadn’t taken photos. But by then, Janet’s husband was back in Texas and unable to return. 

They demanded George cover $30,000 in mold remediation, testing, and subsequent repairs. That’s when George submitted the claim to us, InspectorPro Insurance, his insurance provider.

Defending the Claim

Our claims team submitted a denial of liability letter to Janet. Citing George’s pre-inspection agreement and the Louisiana State Board of Home Inspector’s scope, our team argued that George had identified what he could with a limited, non-invasive mold and home inspection. His inspection could not predict future mold growth, we argued, so he should not be blamed for finding mold in the house later.

Because Janet discovered signs of mold in her home only a month after George’s inspection, and because George didn’t have anything in his contracts describing the limitations of indoor air quality testing, we offered to settle for the limitation of liability in George’s agreement, which was two times the inspection fee ($1,400).

Janet was not happy with the offer, but our claims team held their ground. When Janet threatened to take George to court, we pointed to his contract’s dispute resolution provision, which mandated arbitration. We also acknowledged that, while Janet was upset, she hadn’t brought any new information proving George’s fault. Our claims team, again, denied George’s liability and offered the $1,400 settlement.

Janet realized she didn’t have a case and reluctantly accepted the offer. After signing a release of all claims, which would prevent her from filing future claims against George, our team paid her the $1,400 settlement and closed the mold inspection claim. The inspector’s deductible was $2,500, but he only paid us the lesser amount of $1,400.

5 Things Every Inspector Should Do

Having paid nearly $29,000 less than what Janet demanded, George was relieved. Without us as his insurance provider, George could have paid out much more to Janet or spent lots of money on his defense. 

George was not at fault, and he did many things that helped his defense. But he did make some mistakes. Let’s learn from his wins and losses.

1. Have a solid pre-inspection agreement.

George’s pre-inspection agreement did a lot for his defense. By having Janet sign the contract prior to the inspection (as all clients should), George gave Janet time to read and accept the terms of his inspection services.

Once Janet did lodge a complaint against George, the limitation of liability and dispute resolution provisions in his contract also helped set realistic parameters for her complaint.

You, too, can have an agreement that’s there for you and your client when you need it most with InspectorPro’s model pre-inspection agreement, available to insureds at no additional cost. Learn more about InspectorPro’s agreements at inspectorproinsurance.com.

2. Utilize addendums for additional services.

When you’re performing a standard home inspection, you exclude a lot of ancillary services. So when you add a service like mold sampling to your inspections, you have to remove that exclusion and add the scope of the new service back in. The easiest way to do that is with a separate contract or addendum.

George followed this best practice when he had Janet sign his standard pre-inspection agreement and a mold sampling agreement. In this case, explaining the limitations of his mold sampling scope in his mold disclaimer were crucial for several reasons:

By stating the inspection was visual, George made it clear that he was only accountable for what was visually present that day. During his initial inspection, there were no black dots of mold or other signs of mold on the walls for him to see, so he couldn’t report them.

His scope acknowledged that mold might exist in inaccessible areas, such as behind walls, and that his testing would not identify that mold. This was particularly important because Brian, the home mold specialist, inspected by a different set of standards than a home inspector would. Unlike George, he’d drilled a hole in the wall to take some of his samples. To say that George should have been able to find what Brian did, then, was like comparing apples to oranges.

By stating the inspection was not technically exhaustive, George’s mold disclaimer left room for mold in the house that he did not identify because it was in a place he didn’t sample. While George didn’t test around the supply and wall register, Brian did, which explains why Brian found mold where George did not.

But George took a misstep: His mold inspection contract didn’t say anything about indoor air sampling, and he didn’t use a separate contract or addendum for air sampling, either. This meant that his air sampling’s purpose, scope, methods, and limitations were up for debate. Had Janet signed an indoor air sampling agreement detailing George’s service, it would have been less likely to be a point of contention.

So when you add ancillary services to your home inspections, remember to clarify your scope and exclusions with an additional contract or addendum. For more information on how to do that, read InspectorPro’s article on separate contracts for separate services at inspectorproinsurance.com.

3. Use pre-claims assistance.

This mold inspection claim didn’t go from zero to a $30,000 demand overnight. And in the interim, George could have used pre-claims assistance to deescalate.

Pre-claims assistance gives you professional help addressing client complaints that haven’t become written demands for money or full-fledged lawsuits—all at no additional cost. By responding to client concerns early, pre-claims assistance helps you come to a resolution before you have a claim.

Had George used pre-claims assistance, he could have received valuable help addressing Janet’s allegations before she believed George was negligent and responsible for her remediation and repairs. With this assistance, he may have been able to respond to Janet’s complaint and suggest next steps to help her feel empowered, without needing a refund.

4. Perform prompt and thorough re-inspections.

When you receive a complaint or claim, it’s always wise to revisit the property. Re-inspecting gives you the opportunity to see the defects and document them yourself. It also demonstrates goodwill to your clients by showing that you take their concerns seriously and want to investigate.

While it’s great that George went back to the property, he could have improved his approach. After Janet called concerned about the signs of mold in her home, it took George almost a month to re-inspect. That’s a long time for the client to fester and for the potential problem to get worse. 

George also failed to get his own photographs of the mold during his re-inspection, which could have captured early signs of mold in the walls. This was a huge oversight because it left the claims team to rely on pictures Janet provided. Had George taken photos himself, it would have been easier to compare the photos from the original inspection to the re-inspection and defend him.

So always re-inspect as quickly as you can, and don’t forget to take copious amounts of pictures.

5. Carry the mold endorsement (even if you don’t inspect for it).

It may seem counterintuitive to pay for mold inspection insurance if you don’t perform mold inspections. But non-performance is not protection.

Mold is the fourth most common type of errors and omissions (E&O) claim against home inspectors. And most mold damage lawsuits aren’t because they performed poor sampling, as Janet accused George of doing. They’re for not identifying mold at all.

Most insurance policies have mold exclusions, meaning you don’t have coverage for mold inspection claims unless you carry a mold endorsement. Having the endorsement ensures you have the legal defense and indemnity you need if a mold claim comes knocking.

Learn more about how insurance endorsements protect your inspection business at inspectorproinsurance.com.

Preventing Mold-in-the-House Claims

Can you be sued for mold that wasn’t there? One inspector almost was.

An ironclad agreement with addendums, pre-claims assistance, and thorough re-inspections can prevent mold claims. But make sure you’re protected in case an unexpected claim still strikes. 

Regardless of whether you offer mold inspections, get endorsements for mold and other common claims to prevent claims from growing into a legal nightmare. Talk to an InspectorPro broker about adding individual endorsements or a bundle today.

Note: The Managing Risk column with InspectorPro Insurance provides home inspectors with tips to protect their businesses against insurance claims

Stephanie Jaynes is the Marketing Director for InspectorPro Insurance, which offers ASHI members exclusive benefits through its program: InspectorPro with the ASHI Advantage. Through risk management articles in the ASHI Reporter and on the InspectorPro website, InspectorPro helps inspectors protect their livelihood and avoid unnecessary risk. Get peace of mind and better protection with InspectorPro’s pre-claims assistance and straightforward coverage. Learn more at inspectorproinsurance.com/ashi-advantage.

Opinions or statements of authors are solely their own and do not necessarily represent the opinions or positions of ASHI, its agents, or editors. Always check with your local governmental agency and independently verify for accuracy, completeness, and reliability.