Austin Guide to Texas Property Insurance Law & Mold Claims

Estimated read time: 13 min read

Introduction: Why Austin Homeowners Need to Know Their Rights

Austin’s booming housing market, humid subtropical climate, and recent spikes in severe weather have combined to make property insurance disputes more common than ever. Whether you own a historic bungalow in Hyde Park or a new build in Circle C, you pay premiums expecting your carrier to make you whole after a loss. Unfortunately, many Central Texas policyholders face delayed, underpaid, or even flat-out denied claims—especially when the damage involves hard-to-see threats like hidden water leaks and resulting mold growth.

This guide arms Austin homeowners with the knowledge they need to navigate Texas property insurance law and fight back when insurers refuse to play fair. You’ll learn:

• How the Texas Insurance Code protects you—and the strict deadlines carriers must meet.

• Common causes of disputes in Travis County, from hail-pelted roofs to toxic mold.

• Step-by-step strategies to preserve your claim, invoke appraisal, or pursue a bad-faith lawsuit.

• When to call an austin insurance attorney for help—and what Louis Law Group can do for you.

Armed with these insights, you’ll be ready to demand the prompt, full payment you’re owed under Texas law.

Understanding Texas Property Insurance Law

Key Statutes Every Austin Homeowner Should Know

Texas has some of the nation’s strongest consumer-protection laws for insurance. Three sections of the Texas Insurance Code are especially important:

• Chapter 541 – Unfair Methods of Competition & Unfair or Deceptive Acts. This allows policyholders to sue carriers that misrepresent coverage, fail to conduct reasonable investigations, or unjustly deny claims. Damages can include attorney’s fees and up to treble (triple) damages if the carrier acted knowingly.

• Chapter 542 – Prompt Payment of Claims Act (PPCA). Insurers have 15 days to acknowledge your claim, 15 business days to request information, and generally 60 days to pay after receiving everything they reasonably need. Failure to meet these deadlines triggers statutory interest (currently 18% per year) plus attorney’s fees.

• Chapter 542A – Weather-Related Claims. After the 2017 legislative session, carriers gained the right to elect to assume liability for their adjusters to limit lawsuits. However, this chapter still preserves your right to sue and collect PPCA penalties.

For the actual statutory text, see Texas Insurance Code Chapter 542.

Bad Faith vs. Breach of Contract

In Texas, you can pursue two parallel causes of action:

• Breach of contract—the insurer failed to pay amounts owed under the policy.

• Bad faith (extracontractual liability)—the insurer’s conduct was unfair or deceptive under Chapter 541 or violated PPCA deadlines under Chapter 542.

The Texas Supreme Court’s landmark opinion in Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d 165 (Tex. 1987), confirmed policyholders can recover for bad faith even when no breach of contract occurs, so long as the carrier’s conduct was unreasonable.

Common Property Insurance Disputes in Texas

Each year the Texas Department of Insurance (TDI) receives thousands of homeowner complaints. In Austin, the most frequent loss types include:

1. Wind & Hail Damage

Central Texas is firmly in “Tornado Alley.” Even non-tornadic spring storms drop hail that fractures shingles and dents metal roofs. Insurers often claim the damage is “cosmetic,” delaying or reducing payouts.

2. Water Damage & Plumbing Leaks

Frozen pipes during Winter Storm Uri (2021) caused unprecedented losses. Insurers frequently deny coverage by citing “gradual leak” exclusions or arguing mold was pre-existing.

3. Mold Damage (Our Spotlight Topic)

Thanks to Austin’s humidity and increasingly intense rain events, hidden moisture can spawn toxic mold colonies behind walls and under flooring. Carriers sometimes argue mold is excluded or cap coverage at minimal levels. Yet, if the cause of mold—such as a burst pipe—is covered, Texas courts often require the insurer to pay for remediation of resulting mold as well.

4. Fire & Smoke Losses

From Hill Country wildfires to electrical shorts, smoke infiltration can render a home uninhabitable. Disputes arise over cleaning vs. full replacement of damaged components.

5. Scope & Pricing Battles

Even when coverage is accepted, insurers routinely produce lowball estimates using regional pricing that fails to match Austin’s surging construction costs.

Texas Legal Protections & Regulations

Statutory Deadlines at a Glance

• Notice of Claim: Most policies require “prompt” notice, typically within 30 days of discovering damage. Late notice may bar coverage.

• Insurer Acknowledgment: 15 calendar days (or 30 for surplus lines) under Tex. Ins. Code § 542.055.

• Request for Additional Info: 15 business days.

• Payment or Denial: 60 days after receiving all requested items.

• Appraisal Demand: Check your policy—many require a written demand within 30–60 days after a disagreement.

• Lawsuit Statute of Limitations: Contract claims: four years in Texas (Tex. Civ. Prac. & Rem. Code § 16.004). Many policies shorten this to two years plus one day—always review the limitations clause.

The Appraisal Clause

Most Texas homeowner policies feature an appraisal provision. Either side can invoke it when the dispute is solely about the amount of loss, not coverage. After each party selects an appraiser, the two choose an umpire who issues a binding award if the appraisers disagree. Though appraisal is quicker than litigation, carriers sometimes weaponize it—hoping cash-strapped homeowners won’t front the appraisal fee.

Bad Faith Penalties

If your insurer knowingly ignores evidence or violates PPCA deadlines, courts may award:

• 18% statutory interest on the amount owed.

• Reasonable attorney’s fees.

• Additional damages up to three times actual damages if the conduct was knowing or intentional (Tex. Ins. Code § 541.152).

Recent Court Rulings Impacting Austin Policyholders

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) – Confirmed appraisal awards generally bar subsequent breach-of-contract claims unless the insured demonstrates the award was the product of fraud or the insurer failed to comply with the award.

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) – Held an insurer can still face PPCA interest and fees even after paying an appraisal award late.

• Crum & Forster Specialty Ins. Co. v. CBRPS, LLC, 900 F.3d 673 (5th Cir. 2018) – Reinforced that mold caused by a covered peril can be compensable despite mold exclusions, depending on policy language.

Five Critical Steps After a Property Insurance Dispute

1. Document Everything Immediately

Take date-stamped photos and videos of all damage, including hidden mold growth behind baseboards or inside cabinets. Keep receipts for emergency repairs, hotel stays, and remediation costs.

2. Obtain Independent Estimates

Carriers often rely on in-house or third-party adjusters with incentive to minimize payouts. Secure written bids from licensed Austin contractors, mold remediators, and public adjusters to create a realistic scope of work.

3. Review Your Policy & Deadlines

Look for relevant endorsements such as mold remediation sub-limits or water backup exclusions. Mark appraisal and suit-limitation deadlines on your calendar to avoid forfeiting rights.

4. Communicate in Writing

Texas law favors clear notice. Email your adjuster and send certified letters that reiterate claim numbers, dates, and prior phone conversations. Written records bolster a bad-faith case.

5. Escalate When Necessary

If your carrier:

• Misses PPCA deadlines

• Offers less than repairs will cost

• Denies mold coverage without investigating hidden moisture

then file a formal complaint with TDI (online complaint form) and consider hiring an austin insurance attorney.

When to Seek Legal Help in Texas

Not every dispute requires immediate litigation—but certain red flags mean it’s time to call a lawyer:

• Carrier delays over 60 days with no payment.

• Offer is less than 75% of third-party estimates.

• Coverage is denied based on alleged “wear and tear” without moisture testing or destructive inspection.

• You’re asked to sign a broad release before receiving funds.

Louis Law Group represents Austin homeowners on a contingency-fee basis—you pay nothing unless we recover more money. Our attorneys are licensed in Texas (State Bar No. 240XXXX) and have recovered millions for policyholders statewide.

Local Resources & Next Steps

Government & Non-Profit Help

Texas Department of Insurance – File complaints and access consumer guides. Texas Judiciary Online – Search court rules and locate Travis County District Courts. Austin Bar Association – Lawyer referral service and pro bono clinics.

Checklist Before Contacting an Attorney

• Gather your policy declarations and endorsements.

• Assemble all correspondence with your insurer.

• Compile photos, videos, and contractor estimates.

• Write down a timeline of events from date of loss through today.

Call to Action

If your Texas property damage claim has been delayed, underpaid, or denied—especially involving hidden mold—call Louis Law Group at 833-657-4812 for a free case evaluation and policy review. Don’t let carrier tactics or confusing policy language rob you of the full recovery you deserve.

Legal Disclaimer

This guide is for informational purposes only and does not constitute legal advice. Consult a qualified attorney regarding your individual situation. Reading or using this content does not create an attorney-client relationship with Louis Law Group.