Property Insurance FundamentalsQuestion 158 of 158
A homeowner's 30-year-old galvanized water supply line gradually rusts through and slowly leaks behind a wall for several months, eventually causing $18,000 in mold and drywall damage. The HO-3 will most likely:
a.Deny the claim because the loss arises from wear and tear, rust, and gradual deterioration — all excluded
b.Pay the full $18,000 under the open-peril dwelling coverage
c.Pay the loss because mold is automatically covered up to $50,000
d.Pay only the cost of the new pipe but not the water and mold damage
Explanation
Wear and tear, rust, corrosion, gradual deterioration, and resulting mold are EXCLUDED under the standard HO-3. Property insurance covers SUDDEN AND ACCIDENTAL events, not slow consequences of aging or owner neglect. A SUDDEN burst of the same pipe would be a different question and may be covered.
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