Houston Guide: Texas Mold Damage Insurance Rights

Estimated Read Time: 14 min read

Introduction: Why Mold Damage Insurance Rights Matter in Houston

Houston’s heat, humidity, and frequent storms create a perfect environment for mold growth after a water event. Whether the moisture starts with a burst pipe, hurricane-driven rain, or roof leak, mold can spread quickly—often before insurers even send an adjuster. Unfortunately, many Houston policyholders find their mold damage claims delayed, underpaid, or outright denied. Texas law gives you powerful tools to fight back, but only if you know how to use them.

This comprehensive guide—tailored specifically to Houston homeowners—explains the critical sections of the Texas Insurance Code, statutory deadlines, recent court decisions, and practical steps to protect your claim. If you face pushback from your insurer, remember that Louis Law Group stands ready to help. Call 833-657-4812 for a free case evaluation and policy review.

Understanding Texas Property Insurance Law

Key Statutory Protections for Policyholders

• Texas Insurance Code Chapter 542 (Prompt Payment of Claims Act). Insurers must acknowledge your claim within 15 calendar days (extendable to 30 during a catastrophe notice) and accept or reject within 15 business days after receiving all requested items. Failure triggers statutory interest (18% per annum) and attorney’s fees.

• Chapter 541 (Unfair Settlement Practices). Prohibits misrepresenting policy facts, failing to attempt a prompt, fair settlement, or refusing to pay without reasonable investigation. Violations can lead to treble damages if the insurer acts knowingly.

• Chapter 542A applies to weather-related property damage—including the water intrusion that frequently precedes mold. It requires a 60-day presuit notice but also protects policyholders’ right to sue in Texas state courts.

Prompt Payment Deadlines in Plain English

• Day 0–15: Insurer must acknowledge your notice of mold damage claim.

• Day 15–30: Insurer should send written request for documentation (photos, contractor reports, moisture readings, etc.).

• Day 45: After receiving all items, insurer must pay or reject. They can extend to 60 days for catastrophes.

Missed deadlines put the insurer on the hook for statutory interest and legal fees—leverage that often prompts quick settlements.

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

Common Property Insurance Disputes in Texas

While this guide focuses on mold, understanding Texas’ broader dispute landscape will help you frame any claim:

• Mold and Microbial Growth. Frequently denied under “mold exclusions” or sub-limits, even when the underlying water damage is covered.

• Wind and Hail Damage. From spring storms and hurricanes that bruise shingles, break tiles, and let moisture seep into attics.

• Water Damage and Plumbing Leaks. Hidden pipe breaks can drench insulation and drywall, triggering mold in as little as 24–48 hours.

• Hurricane and Tropical Storm Claims. Houston’s proximity to the Gulf means insurers scrutinize every detail, often blaming “flood” to shift liability to the NFIP.

• Fire and Smoke. Suppression water can spawn mold colonies behind walls long after cleanup crews leave.

Mold is entwined with these perils because insurers sometimes pay for initial water mitigation but balk at subsequent mold remediation, claiming it is a separate peril or exceeds policy limits.

Texas Legal Protections & Regulations

Statute of Limitations

Generally, Texas homeowners have two years from the date the insurer’s liability accrued (usually the denial or underpayment date) to file a bad faith lawsuit under Chapter 541. Contract actions (breach of policy) carry a four-year limit, but many policies shorten it to two. Act promptly and consult an attorney to avoid waiver.

Appraisal Clause

Most Texas property policies contain an appraisal provision. Either party can invoke appraisal when the dispute is over the amount of loss, not coverage. Once invoked, each side picks an appraiser; the appraisers then select a neutral umpire. Deadlines vary by policy but typically require naming an appraiser within 20 days.

Recent case law—State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009)—affirms that appraisal awards are binding absent fraud or procedural irregularities. However, appraisal does not waive bad faith claims if the insurer unreasonably delayed or underpaid before appraisal.

Bad Faith & Extra-Contractual Damages

Under Universe Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997), policyholders must show the insurer lacked a reasonable basis to deny or delay payment and knew or should have known. For mold claims, insurers often cite policy exclusions; a skilled attorney can demonstrate the water source was covered, making subsequent mold a covered loss or triggering coverage under Texas’ “efficient proximate cause” doctrine.

Regulatory Complaints

If informal negotiations stall, file a written complaint with the Texas Department of Insurance (TDI). TDI can investigate, require a written response from the carrier, and sometimes prompt voluntary resolution. While not a substitute for litigation, the complaint file becomes discoverable evidence in a later suit.

Steps to Take After a Property Insurance Dispute

1. Document Everything—Immediately

• Photograph and video all visible mold, water stains, and damaged personal property.

• Keep samples if safe—cut a small piece of moldy drywall for potential lab testing.

• Create a timeline noting the date of water intrusion, first signs of mold, and every contact with the insurer.

2. Mitigate Further Damage

Texas policies require you to prevent continuing loss. Hire an IICRC-certified remediation firm for drying and containment. Provide invoices to the insurer. Failure to mitigate can reduce recovery, but excess costs caused by insurer delay are recoverable.

3. Obtain Independent Estimates

Carrier adjusters often use generic pricing. Secure at least two Houston-area contractor bids, including detailed scope: removal of contaminated materials, HEPA filtration, clearance testing, and rebuild costs.

4. Invoke Appraisal (If Appropriate)

If the dispute is purely dollars, send written appraisal demand via certified mail as per policy language. Keep proof of mailing.

5. Preserve Communications

• Use email whenever possible and save replies.

• Log phone calls (date, time, name, summary).

• Store carrier letters and estimate summaries in a single folder.

6. File a TDI Complaint

Complete TDI Form FIN505 or file online. Attach photos, bids, and the insurer’s correspondence. Reference specific Insurance Code sections believed violated (e.g., Chapter 542 for missed deadlines).

7. Consult an Attorney Early

A qualified houston insurance attorney can spot bad-faith tactics, calculate statutory interest, and negotiate or litigate for full benefits. Many, including Louis Law Group, work on contingency—no fees unless you recover.

When to Seek Legal Help in Texas

Mold claims get messy—literally and legally. You should involve counsel when:

• The insurer denies coverage based on a mold exclusion but paid for water mitigation.

• Sub-limits (often $5,000–$10,000) clearly understate remediation costs and the carrier refuses to acknowledge ensuing loss coverage.

• Delays exceed Chapter 542 deadlines, costing you rental or hotel expenses while your home remains uninhabitable.

• Inspection reports conflict: insurer says “pre-existing condition,” your contractor says “sudden and accidental.”

• You receive a lowball appraisal award stemming from the insurer’s preferred appraiser.

Louis Law Group has helped Texas homeowners recover millions from stubborn carriers. Our team reviews policies clause by clause, deploys industrial hygienists for mold testing, and litigates aggressively when bad faith surfaces.

Take action now: Call 833-657-4812 or schedule online for a free case evaluation and policy review. Time limits are strict—do not wait.

Local Resources & Next Steps

State & Municipal Agencies

Texas Department of Insurance (TDI) – File complaints, verify carrier licenses, and access consumer guides. City of Houston Legal Department – Links to municipal codes affecting remediation contractors. Harris County District Clerk – Search property insurance lawsuits and file pleadings electronically.

Legal Aid & Professional Associations

Houston Bar Association – Lawyer referral program and free legal clinics.

• State Bar of Texas – Verify attorney status and disciplinary history.

Statutory Deadlines Checklist

• Claim notice to insurer: ASAP, preferably within 30 days of discovering mold.

• Insurer acknowledgment: 15 days.

• Carrier decision: 15 business days after receiving all info.

• Appraisal demand: Follow policy (often within 60 days of dispute).

• Bad faith suit: 2 years from accrual.

Climate & Weather Risks Unique to Houston

Houston averages 50+ inches of rain annually and sits barely above sea level. Hurricane Harvey (2017) and Tropical Storm Imelda (2019) revealed how quickly moisture breeds mold in sheetrock, insulation, and HVAC systems. Insurers often argue "flood" to dodge mold remediation bills. Knowing FEMA definitions versus policy flood exclusions is crucial—legal counsel can help untangle overlapping coverages.

Disclaimer

This guide provides general information about Texas property insurance law and is not legal advice for your specific situation. Reading it does not create an attorney–client relationship. Always consult a licensed Texas attorney before acting on any legal matter.

Take Control of Your Mold Damage Claim Today

If your property insurance claim has been delayed, underpaid, or denied, call Louis Law Group at 833-657-4812 for a free case evaluation and policy review. Our experienced Houston insurance attorneys fight to maximize your recovery under Texas law.