Guide to Texas Property Insurance Law in Houston

12 min read

Introduction: Why Houston Homeowners Must Know Their Insurance Rights

From tropical downpours that trigger roof leaks and mold growth to spring hailstorms pelting siding and shingles, Houston’s subtropical climate creates year-round risks for property owners. Unfortunately, insurance carriers do not always pay promptly—or fully—when disaster strikes. Homeowners in Houston, Texas frequently confront claim delays, underpayments, and outright denials for covered losses such as water damage, mold remediation, wind/hail destruction, hurricane losses, and fire. Understanding your legal rights under Texas property insurance law can be the difference between a quick, fair settlement and months (or years) of financial strain.

This comprehensive guide—written from a homeowner-friendly perspective—explains:

• Key provisions of the Texas Insurance Code and prompt-payment statutes

• Common dispute scenarios, including mold damage unique to Houston’s humidity

• Statutory deadlines every policyholder must meet

• Actionable steps—from documentation to appraisal—to strengthen your claim

• When and how to enlist an experienced Houston insurance attorney

Armed with this knowledge, Houston homeowners can level the playing field against well-funded insurers and assert the protections Texas law provides.

Understanding Texas Property Insurance Law

Key Chapters of the Texas Insurance Code

The Texas Legislature has enacted consumer-centric statutes that regulate how insurers handle property claims. The most important chapters are:

• Chapter 542 – Prompt Payment of Claims Act (PPCA): Requires carriers to acknowledge your claim within 15 calendar days, commence investigation, and pay or deny within 15 business days after receiving all requested information. Failure triggers interest (currently 18% per annum) and attorneys’ fees.

• Chapter 541 – Unfair Settlement Practices: Prohibits misrepresenting policy provisions, failing to act in good faith, or denying claims without a reasonable investigation. Violations can result in treble damages.

• Chapter 542A – Weather-Related Claims: Applies specifically to wind, hail, hurricane, and tornado losses. It imposes pre-suit notice requirements and opportunities for early resolution. Insurers can elect to accept liability for adjusters.

You can read the full text on the state’s website: Texas Insurance Code.

Statute of Limitations & Filing Deadlines

• Contract claims for breach of policy: 4 years from the date the cause of action accrues (usually the date of breach).

• Bad-faith/Chapter 541 actions: The earlier of 2 years from the date you discovered (or should have discovered) the violation, plus 180-day tolling if the insured relied on the insurer’s misrepresentations.

• DTPA (Deceptive Trade Practices Act) claims: 2 years.

Missing these deadlines can permanently bar recovery, so calendar them early.

Policy Appraisal Clause

Most Texas homeowner policies include an appraisal provision allowing either party to demand a neutral assessment when only the amount of loss (not coverage) is disputed. The Texas Supreme Court’s decision in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) confirmed that timely invocation of appraisal can stay litigation and bind both parties to the award, absent fraud or procedural misconduct.

Common Property Insurance Disputes in Texas

1. Mold Damage from Water Intrusion

Houston’s humidity and frequent flooding create a perfect environment for mold colonies. Insurers often argue mold is excluded or cap remediation at only $5,000. Yet, many policies cover “resulting damage” from a sudden and accidental discharge of water (e.g., a burst pipe), including necessary tear-out and remediation costs.

2. Wind & Hail Roof Damage

Spring storms along the Gulf Coast bring high winds and large hailstones that fracture shingles and compromise decking. Carriers may undervalue roof replacement by factoring “depreciation” or insisting on spot repairs even when the entire system is compromised.

3. Hurricane & Tropical Storm Losses

From Hurricane Harvey (2017) to Tropical Storm Imelda (2019), Houstonians know floodwaters too well. Distinguishing wind-driven rain (usually covered) from surface flood (often excluded without National Flood Insurance Program coverage) is a common battlefield.

4. Fire & Smoke Claims

Electrical storms and aging wiring frequently ignite structural fires. Insurers may dispute the scope of smoke damage, undervalue personal property, or delay payment pending “cause and origin” investigations.

5. Disputes Over Repair Scope & Pricing

Using estimating software, insurers sometimes apply out-of-area labor rates or omit code-upgrade costs required by Houston’s building ordinances. Texas law (Insurance Code §862.054) mandates that policies provide coverage up to policy limits for necessary repairs.

Texas Legal Protections & Recent Court Decisions

Prompt Payment Penalties

Under Chapter 542, an insurer that misses statutory deadlines owes the amount of the claim plus 18% interest and reasonable attorneys’ fees. The Texas Supreme Court affirmed this remedy in Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019), holding an insurer’s payment of an appraisal award does not preclude PPCA liability.

Bad Faith & Extra-Contractual Damages

The seminal case Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987) recognized a duty of good faith and fair dealing. If an insurer denies a claim when liability is reasonably clear, juries may award punitive damages far exceeding policy limits.

Attorney’s Fees & Chapter 542A Adjuster Election

Chapter 542A introduced a formula that can reduce recoverable attorneys’ fees if pre-suit demand is excessive relative to judgment. Precise calculations and documentation are therefore essential.

Appraisal Timing & Waiver

The Texas Supreme Court’s decision in In re Universal Underwriters, 345 S.W.3d 404 (Tex. 2011) clarified that undue delay in invoking appraisal can constitute waiver, but mere passage of time is insufficient absent prejudice. Homeowners should demand appraisal in writing as soon as an impasse on valuation is apparent.

Practical Steps After a Property Insurance Dispute

Document Immediately Photograph and video every area of damage, including hidden mold growth behind drywall. Keep damaged materials until the adjuster inspects. Mitigate Further Damage Texas policies impose a duty to prevent ongoing loss. Hire licensed water-remediation firms, run dehumidifiers, and keep receipts. Reasonable mitigation is reimbursable. Secure Independent Estimates Obtain written proposals from at least two Houston-area contractors. Insurers often rely on preferred vendors who may underbid. Request the Claim File Under Texas Insurance Code §542.004, you may demand copies of claim-related photos, estimates, and expert reports. Invoke Appraisal (When Appropriate) If the insurer acknowledges coverage but undervalues repairs, send a certified letter invoking appraisal pursuant to policy terms. Name a competent, impartial appraiser with local experience. Submit a Written Complaint to the Texas Department of Insurance (TDI) Use TDI’s online portal (TDI Complaint Process). TDI will contact the insurer and require a response within 15 days. Track All Deadlines Create a claim diary noting dates the insurer received notice, requested documents, and issued decisions. This evidence is vital for PPCA claims. Avoid Recorded Statements Without Counsel Politely defer detailed interviews until you understand your policy and, if necessary, have legal representation.

When to Seek Legal Help in Texas

While many Houston homeowners start the claim process alone, certain red flags warrant immediate legal intervention:

• Denial of a covered loss (e.g., claiming pre-existing damage without proof)

• Lowball payment that does not cover contractor estimates

• Excessive delay beyond statutory deadlines

• Threats of policy cancellation or non-renewal following a claim

• Requests for invasive or irrelevant personal information

An experienced Houston insurance attorney from Louis Law Group can:

• Send a compliant 60-day pre-suit notice under Chapter 542A

• Conduct EUO (examination under oath) preparation

• Pursue appraisal or mediation before litigation

• File suit in Harris County or federal court, preserve evidence, and secure expert witnesses

Texas attorneys must hold an active license from the State Bar of Texas; ethical rules prohibit unreasonable fee arrangements. Louis Law Group works on contingency—no recovery, no fee.

Local Resources & Next Steps for Houston Policyholders

Texas Department of Insurance (TDI) Consumer Help Line: 800-252-3439 | Official TDI Site Harris County District Courts 201 Caroline St., Houston, TX 77002. Docket info: Harris County District Clerk Houston Bar Association LegalLine Free telephonic advice: 713-759-1133 Texas Windstorm Insurance Association (TWIA) For coastal wind coverage questions: 800-788-8247

Final Checklist

• Review your policy’s mold, water, and wind endorsements.

• Notify your insurer within 24–48 hours of discovering damage.

• Keep a written claim diary.

• Request a certified copy of your full policy.

• Consult Louis Law Group if any delay, underpayment, or denial occurs.

Disclaimer

This guide is for informational purposes only and does not create an attorney-client relationship. Laws can change, and individual facts matter. Consult qualified counsel regarding your specific situation.

Get Your Free Case Evaluation

If your property insurance claim has been delayed, underpaid, or denied, call 833-657-4812 for a free case evaluation and policy review from Louis Law Group. Our Houston-based team fights to maximize your recovery—no fees unless we win.