We have an insured with a HO-3D policy. The loss was discovered as light mold damage in the finished basement. We brought in an engineer who opined that there were no sources of water entry such as surface water, water coming through a wall or a sump. The engineer opines that the cause of loss is "condensation" brought on by the cooler weather this summer and that fact that the cooler weather resulted in the AC unit not coming on as much and dehumidifying the basement as AC units normally do.

While we have a "mold exclusion" in the policy, there is no exclusion for "condensation".

We have sold this insured our best HO-3D policy which is "all risks" subject to exclusion. Therefore, we don't have to find a peril to provide coverage but rather we must review the exclusions and determine if any apply. Given that I don't find an exclusion for "condensation" in this contract, I am wondering if this is possibly a covered loss even though it involves mold. In other words, I am thinking that "condensation" is the primary cause of this loss which occurred rather suddenly. Our agency manager advised that there is a maid in the house weekly and that this mold came on most recently and did not occur over a long period of time. I believe this fact will be supported by the analysis of the engineer.