Houston Guide to Mold Claims & Texas Property Insurance Law

Estimated reading time: 13–14 min read

Introduction: Why Houston Homeowners Must Understand Texas Property Insurance Law

Greater Houston’s subtropical climate, frequent Gulf storms, and aging housing stock all create the perfect conditions for water intrusion and mold growth. When leaks, floods, or hurricane-driven rain strike, most homeowners expect their property insurer to step in, investigate promptly, and pay for proper remediation. Unfortunately, Texas policyholders—especially in Harris, Fort Bend, Montgomery, and Galveston counties—often encounter claim delays, underpayments, and outright denials. Understanding your statutory rights under Texas property insurance law is the best way to level the playing field.

This comprehensive guide explains how Texas statutes, regulations, and court precedents protect Houston homeowners. We take a slight policyholder-centric angle, but every statement is fact-checked and evidence-based. Whether you are battling a stubborn mold claim or disputing a hurricane deductible, the following sections give you concrete, step-by-step strategies for protecting your home—and your wallet—under Texas law.

Understanding Texas Property Insurance Law

Key Statutes Every Houston Policyholder Should Know

Texas Insurance Code Chapter 542 – Prompt Payment of Claims Act • Insurer must acknowledge receipt of a claim within 15 calendar days (or 30 days in a declared catastrophe). • Must accept or reject the claim within 15 business days after receiving all requested information. • Failure triggers statutory interest (currently 18% per year) and attorney’s fees. Texas Insurance Code Chapter 541 – Unfair Settlement Practices • Prohibits misrepresenting policy facts, failing to promptly settle, or compelling policyholders to sue. • Allows recovery of actual damages, treble damages for knowing violations, plus attorney’s fees. Texas Insurance Code Chapter 542A – Weather-Related Claims • Applies to wind, hail, and hurricane losses. • Requires presuit notice at least 60 days before filing suit and provides a mechanism to reduce attorney’s fees if the policyholder’s demand is unreasonable. Statutes of Limitations • Breach of insurance contract: generally 4 years under Tex. Civ. Prac. & Rem. Code §16.004. • Bad faith or Chapter 541 actions: 2 years from the date of the unfair act or when it should have been discovered.

Appraisal Clauses Under Texas Law

Most Texas homeowner policies contain an “Appraisal” provision requiring each party to select an appraiser and, if necessary, an umpire to resolve disputes over amount of loss—not coverage. Texas courts, including the Supreme Court of Texas in State Farm Lloyds v. Johnson (2009), consistently enforce appraisal unless waived. The standard timeline: demand in writing within 30–60 days after disagreement, though policies differ.

Critically for mold claims, appraisal can clear deadlocks over the scope and cost of remediation, but it cannot create coverage where none exists. If your insurer states “mold is excluded,” judicial action may be required.

Common Property Insurance Disputes in Texas

1. Mold Damage After Water Intrusion

Texas homeowner policies often cover “sudden and accidental” water discharge but exclude “long-term seepage” and place $5,000–$10,000 caps on mold remediation. Insurers routinely underpay by:

• Misclassifying Category 3 water as Category 1.

• Denying necessary demolition of drywall or cabinetry to access hidden mold.

• Ignoring Texas Department of State Health Services Mold Assessors and Remediators Rules requiring post-remediation clearance testing.

2. Wind and Hail Roof Claims

Frequent hail storms in Katy, Cypress, and The Woodlands lead to subtle bruising that insurers characterize as “cosmetic.” Denials based on “wear and tear” exclusions are common.

3. Hurricane & Tropical Storm Losses

From Hurricane Harvey in 2017 to Tropical Storm Nicholas in 2021, storm surge versus wind‐driven rain is a recurring dispute. NFIP flood policies apply to rising water; homeowner policies cover wind. Allocation is often contentious.

4. Fire & Smoke Damage

Carriers may depreciate labor or limit Additional Living Expenses (ALE), despite Texas Department of Insurance bulletin B-0028-17 advising fair treatment.

5. Disputes Over Repair Scope & Pricing

Carriers using Xactimate pricing sometimes ignore Houston’s post-disaster labor shortages, leading to lowball estimates.

Texas Legal Protections & Regulatory Oversight

Prompt Payment Deadlines & Penalties

• Acknowledge claim: 15 days

• Request documents: 15 days

• Accept or reject: 15 days after receiving docs (extended to 45 days with written explanation)

• Payment: 5 business days after notice of acceptance

Miss these deadlines and insurers owe 18% per annum interest plus attorney’s fees under Tex. Ins. Code §542.060.

Bad Faith & Recent Texas Cases

• Arnold v. Nat’l County Mut. Fire Ins., 725 S.W.2d 165 (Tex. 1987) – Created common-law duty of good faith.

• Universe Life Ins. v. Giles, 950 S.W.2d 48 (Tex. 1997) – Policyholder need only show insurer knew there was no reasonable basis to deny.

• Barbara Techs. v. State Farm, 589 S.W.3d 806 (Tex. 2019) – Voluntary payment after appraisal does not bar prompt-payment penalties.

Regulatory Support

The Texas Department of Insurance (TDI) accepts complaints, publishes claim handling bulletins, and enforces administrative penalties. Consumers can file online or call 1-800-252-3439.

Mold-Specific Regulations

Under 16 Tex. Admin. Code §78, contractors must hold mold remediation licenses, issue Certificates of Mold Damage Remediation, and comply with Texas Mold Assessment and Remediation Rules (TMARR). Retain these certificates—insurers cannot penalize you for past mold if you provide one (Tex. Ins. Code §544.303).

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Photograph and video all damage, including moisture readings and humidity levels.

• Keep damaged materials until the insurer inspects.

• Maintain a claim diary: note dates, adjuster names, and phone calls.

2. Mitigate Further Damage

Texas policies impose a duty to prevent additional loss. Hire an IICRC-certified water mitigation company quickly; retain invoices.

3. Obtain Independent Estimates

Secure at least two contractor bids and, for mold, a Texas-licensed mold assessor’s protocol. An independent scope becomes vital evidence in appraisal or litigation.

4. Demand Appraisal in Writing (If Only Amount Is Disputed)

Send a certified letter citing the policy’s appraisal clause. Name your chosen appraiser and request the insurer reciprocate within 20 days.

5. File a TDI Complaint

If the insurer misses statutory deadlines or engages in unfair practices, file online with TDI. Include your policy number, claim number, and supporting documents.

6. Preserve Legal Rights

Do not sign any global release or Proof of Loss waiving future claims without legal advice. Mark all checks “Partial Payment Only” if damages are unresolved.

When to Seek Legal Help in Texas

Warning Signs You Need an Attorney

• Claim denied on coverage grounds (e.g., “long-term leak,” “wear and tear”).

• Insurer ignores or misses prompt payment deadlines.

• Appraisal invoked but carrier disputes coverage anyway.

• Significant underpayment—more than 20% below independent estimates.

• Request for Examination Under Oath (EUO) without explanation.

Texas attorneys handling first-party property claims must be licensed by the State Bar of Texas and comply with Chapter 542A’s presuit notice and inspection rights. Louis Law Group’s Houston-focused team prepares a detailed demand package, coordinates expert reports, and—if necessary—files suit in Harris County District Court or federal court (Southern District of Texas).

Under Texas law, policyholders may recover attorney’s fees and interest, making legal representation cost-effective even on modest disputes.

Local Resources & Next Steps

Harris County District Clerk – Docket searches and procedural rules. Texas State Law Library Property Insurance Guide – Statutes and case law. Houston Bar Association LegalLine – Free call-in assistance first and third Wednesday evenings.

Legal Disclaimer: This guide provides general information about Texas property insurance law for Houston homeowners. It is not legal advice, nor does it create an attorney-client relationship. Consult qualified counsel regarding your specific facts and insurance policy.

Ready for real help? If your property insurance claim has been delayed, underpaid, or denied, call Louis Law Group today at 833-657-4812 for a free case evaluation and comprehensive policy review. Our Houston insurance attorneys fight aggressively to maximize payouts and hold carriers accountable.