Houston Guide: Texas Property Insurance Law & Mold Damage

Estimated read time: 14 min read

Introduction: Why Houston Homeowners Must Know Their Rights

Houston’s subtropical climate, frequent downpours, and proximity to the Gulf of Mexico make mold damage and other property losses an unfortunate reality for many homeowners. Whether your roof was compromised during a hurricane, a burst pipe soaked your walls, or hidden moisture spawned toxic mold, you count on your insurance carrier to honor its promise. Unfortunately, Texas policyholders routinely face delayed investigations, lowball repair estimates, and outright denials. This guide—written from the homeowner’s perspective—explains how Texas property insurance law protects you, what deadlines insurers must meet, and when it’s time to enlist legal help.

Below, you’ll find:

• An overview of the Texas Insurance Code provisions that govern claim handling and mold coverage.

• Step-by-step instructions for documenting losses, invoking the appraisal clause, and filing complaints.

• Recent court cases shaping appraisal, prompt payment, and bad-faith remedies.

• Local resources every Houston policyholder should know.

Understanding Texas Property Insurance Law

Key Statutes Every Homeowner Should Know

Texas has some of the nation’s strongest consumer protections for policyholders. Three chapters of the Texas Insurance Code are particularly important when navigating a mold or property damage claim:

Chapter 542 – Prompt Payment of Claims Act (PPCA) • Insurers must acknowledge a claim within 15 calendar days. • They must request all necessary documents within the same 15-day window. • After receiving all information, the carrier has 15 business days to accept or deny. • Payment is due no later than five business days after acceptance. Failure triggers interest (currently 18%) plus attorney’s fees. Chapter 541 – Unfair Settlement Practices Prohibits misrepresenting policy terms, failing to attempt a fair settlement, and refusing reasonable investigations. Consumers can recover actual damages, up to treble damages for knowing violations, and attorney’s fees. Chapter 542A – Weather-Related Claims Requires pre-suit notice at least 60 days before filing suit against an insurer on a weather-related claim (including mold stemming from hurricane-driven flooding). The statute also governs how appraisal impacts prompt-payment penalties.

Read the full text at the Texas Insurance Code online.

Mold Coverage Under Texas Policies

Texas carriers must offer mold remediation coverage up to policy limits if the mold results from a covered peril, such as a sudden plumbing leak or hurricane-related roof failure. However, policies often:

• Cap mold remediation at $5,000–$10,000 unless optional endorsements are purchased.

• Exclude mold stemming from ongoing or long-term leaks the carrier labels as “maintenance.”

• Impose strict deadlines—often 14 days—for you to start drying the property.

If your adjuster denies mold coverage, ask for the specific policy language relied upon. Under Tex. Ins. Code § 542.056(c), the insurer must explain in writing the factual and legal basis for any denial.

Common Property Insurance Disputes in Texas

While mold claims dominate headlines, Houston homeowners encounter a variety of disputes:

• Wind and Hail Damage – Spring storms can deliver 70-mph gusts and golf-ball-sized hail. Disputes often arise over shingle matching, total roof replacement versus patching, and code-upgrade costs.

• Hurricane Losses – Tropical storms like Harvey (2017) and Nicholas (2021) create complex wind-versus-flood causation problems. Insurers may try to shift blame to FEMA flood coverage even when wind opened the building envelope.

• Water Damage & Mold – Burst pipes, HVAC leaks, or storm-driven rain can trigger mold within 48 hours. Carriers sometimes argue the moisture was “pre-existing” or “slow.”

• Fire & Smoke – Disputes center on cleaning versus replacement and smoke odor remediation.

• Scope of Repair & Pricing – Xactimate pricing disputes, overhead and profit exclusions, and denial of code-upgrade costs.

Regardless of the loss type, the same statutory deadlines apply. If your insurer drags its feet, you may have a bad-faith claim.

Texas Legal Protections & Key Court Decisions

Statutory Deadlines & Appraisal Timelines

Texas policies typically allow either party to demand appraisal to resolve disputes over the amount of loss. Although the Insurance Code does not mandate a specific timetable, most policies require each side to appoint an appraiser within 20 days, followed by the selection of an umpire. The Texas Supreme Court in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) confirmed that appraisal is binding on the amount of loss but does not decide coverage. Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) further held that an insurer’s timely payment of an appraisal award does not, by itself, eliminate liability for prompt-payment penalties.

Bad-Faith & Extra-Contractual Remedies

Under Arnold v. National County Mutual, 725 S.W.2d 165 (Tex. 1987) and Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663 (Tex. 1995), Texas recognizes a common-law duty of good faith and fair dealing. Violations may warrant mental-anguish damages and punitive damages in egregious cases.

Statute of limitations generally run as follows:

• 2 years (or 2 years and 1 day) for Chapter 541 unfair practices.

• 4 years for breach-of-contract actions.

• Shorter contractual limitations (often 1 year) may appear in policies, but Texas law voids limitations periods shorter than 2 years for first-party claims (Murray v. San Jacinto Agency Inc., 800 S.W.2d 826 (Tex. 1990)).

Attorney’s Fees

Tex. Civ. Prac. & Rem. Code § 38.001 and Texas Insurance Code § 542.060 permit recovery of reasonable attorney’s fees. Homeowners who prevail on prompt-payment or bad-faith claims often recover both fees and 18% interest on the claim amount.

Steps to Take After a Property Insurance Dispute

1. Mitigate & Document Immediately

Under most policies, you have a duty to prevent further damage. In a mold scenario, that means:

• Hiring a certified water-remediation company to extract water within 24–48 hours.

• Taking clear photographs or videos before, during, and after remediation.

• Saving samples of damaged drywall or flooring.

• Keeping receipts for fans, dehumidifiers, and temporary lodging.

2. Request a Certified Copy of Your Policy

Your adjuster’s interpretation may differ from the actual contract. Send a written request for the full policy, endorsements, and declarations page. The carrier must provide copies under Tex. Ins. Code § 542.003(b)(3).

3. Obtain Independent Estimates

Never rely solely on the insurer’s scope. Hire a licensed Houston contractor or public adjuster to draft an itemized estimate, including:

• Mold testing, containment, and clearance protocols.

• Code upgrades required by the 2021 International Residential Code adopted by the City of Houston.

• Overhead & profit if multiple trades are needed.

4. Invoke Appraisal When Appropriate

If both parties agree on coverage but disagree on the amount, send a written demand for appraisal per your policy. Name a competent, impartial appraiser. Keep in mind that appraisal costs are typically split 50/50, so weigh the disputed amount against potential expenses.

5. File a Complaint with the Texas Department of Insurance (TDI)

If your insurer violates prompt-payment deadlines or refuses to explain a denial, file a complaint online with TDI. The department tracks patterns of misconduct and can pressure carriers to comply. Start here: TDI Consumer Complaint Portal.

6. Preserve Your Legal Claims

Send a Chapter 542A pre-suit notice (for weather-related claims) at least 60 days before filing suit. Include:

• Dollar amount of damages, interest, and attorney’s fees sought.

• The specific provisions the insurer violated.

• Supporting documents and photographs.

Mail via certified mail, return receipt requested, to create a verifiable paper trail.

When to Seek Legal Help in Texas

You can handle small claims on your own, but consider retaining counsel when:

• Your carrier denies mold coverage based on “wear and tear” or “long-term seepage.”

• Repair estimates differ by more than $10,000.

• The insurer fails to pay within statutory deadlines.

• An adjuster pressures you to accept a low settlement.

• Appraisal is invoked but the carrier names a biased appraiser.

Louis Law Group’s Houston-licensed attorneys focus exclusively on first-party property insurance disputes. Our team understands Xactimate pricing, mold protocols, and the nuances of Texas bad-faith law. We handle:

• Free policy reviews to spot hidden endorsements or exclusions.

• Statutory-deadline enforcement letters that compel timely action.

• Litigation and appraisal oversight, so you’re not outmatched by the insurer’s legal team.

Local Resources & Next Steps

Texas Department of Insurance – File complaints, verify company licenses, and read consumer guides. Harris County District Courts – Where most Houston insurance lawsuits are filed. Houston Bar Association – Lawyer referral service and pro bono resources. TexasLawHelp.org – Free self-help forms and legal information.

Legal Disclaimer

This guide provides general information and is not legal advice. Laws may change, and court outcomes vary based on specific facts. For advice about your situation, consult a licensed Texas attorney.

Take Action Today

If your property insurance claim has been delayed, underpaid, or denied—or if you’re battling mold damage in Houston—call Louis Law Group at 833-657-4812 for a free case evaluation and policy review. Protect your home, protect your rights.