Q: I submitted a claim for mold in my attic to my homeownerâ€™s insurance carrier. They sent an engineer around to survey the mold, of which there was plenty.
The insurance company later informed me that they wouldn’t honor my claim due to humidity in the house. Is there anything I can do to have them honor my claim? I read your column every week and apply your advice to my everyday experiences.
A: Iâ€™m not sure there is anything you can do about getting the insurance company to cover the claim, but what you should do first is read your policy carefully. Most insurers are not covering mold claims except due to specific circumstances, like a burst pipe, and often not at all. Mold is often specifically excluded from coverage.
Try to look at it from the insurance company’s point of view: If your attic isn’t properly vented, and the roof leaks or there’s a high humidity level in the house, then mold could grow. But that isn’t why you carry homeowner’s insurance.
The problem that many insurance companies are having is that mold is extremely difficult to remove, and in extreme cases, the home might have to be “gutted” or even torn down. That’s an expensive claim and one that might have been able to be prevented by keeping humidity low in the house and keeping out moisture.
But that’s not to say you haven’t had damage caused by a “covered” problem. So, check out your policy. You can always contest the insurance company’s finding. A real estate attorney should be able to advise you further.
Jan. 2, 2004.
Q: My husband and I have purchased a home and only lived in it for 5 months. In a very short time, the housing costs in our area have skyrocketed. Our house is now worth around $100,000 more than what we paid for it.
If we were to sell it and re-invest all of what we make into a more expensive home, do we still get hit with capital gains?
A: Yes. Unless youâ€™ve lived in your home for two of the past five years, you will have to pay 15 percent capital gains tax on the profits. In your case, that would amount to $15,000.
The question is, why move now? Why not wait another year and a half until you can keep all of the profit tax-free? Do you believe that this is a temporary spike in prices and that prices will ultimately fall?
If that’s your take, then you should sell and move into something that has more potential to increase in profits down the line or use your windfall and move into an area with a better school district.
Paying a little tax is better than missing all of the profit.
Jan. 2, 2004.