Our insured was away from his home for a period of time over the winter. He had left the thermostat set on low, but it malfunctioned and the furnace never came on during an extremely cold spell. The pipes froze and burst, and when the homeowner returned he found considerable water damage as well as mold beginning to form.

We have no problem paying for the water damage, but are not sure whether we owe for the mold damage. The ISO HO 00 03 10 00 states that the policy does not pay for mold, fungus, or wet rot unless it is "hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure if such loss results from the accidental discharge or overflow of water or steam from within [a] plumbing…system." But here, the mold was not hidden; it was obviously beginning to grow.

Do we owe for this loss? Would it make any difference if endorsement HO 04 27 04 02 limited fungi, wet or dry rot, or bacteria coverage were attached?