Damage resulting from water, moisture, mildew, or mold is excluded in the policy if it results primarily from any condition substantially confined to the dwelling or within the policyholder’s control. This includes failure to maintain and inspect the property after the flood recedes. The policyholder must mitigate damages.

In the first example, the policy only pays for what is reasonable, a 4-foot gut of the risk. Had the policyholder mitigated the damages, for instance by removing wet carpet, drywall, insulation, etc., the additional damage would not have occurred.