If Insulation Gets Wet, Will it Mold? 

It definitely could. Mold is almost synonymous with moisture, and this harmful fungus just needs humidity and organic material to thrive. Since crawl spaces often provide these conditions, mold easily grows on or around your wet insulation. This can become a major problem for you and your family because mold spores are dangerous to human health. Mold spores could spread into your home and cause respiratory issues or grow in other places such as bathrooms or closets. Make sure when looking out for wet insulation that you wear protective gear in case of mold and mildew.