Houston Guide to Texas Property Insurance Law

Estimated read time: 13 min read

Introduction: Why Houston Homeowners Need to Understand Texas Property Insurance Law

Houston’s humid climate, Gulf Coast proximity, and year-round storm activity make property damage—especially mold damage, wind/hail, and water intrusion—hardly a matter of “if,” but “when.” After Hurricane Harvey, Winter Storm Uri, and countless severe thunderstorms, many Houstonians discovered that collecting on an insurance policy can be almost as stressful as the disaster itself. Underpayments, slow responses, and outright denials are common. Knowing your rights under Texas property insurance law empowers you to push back, preserve evidence, and—if necessary—pursue legal action.

This guide walks Houston policyholders through the legal framework governing property insurance claims, the most frequent disputes (including mold-related losses), statutory deadlines, appraisal rights, and when to involve an attorney. It is slightly tilted toward protecting homeowners because insurers possess far greater resources and institutional knowledge. The information is based on the Texas Insurance Code, Texas Department of Insurance (TDI) regulations, and recent court precedents.

Understanding Texas Property Insurance Law

Key Statutes Every Policyholder Should Know

• Texas Insurance Code Chapter 541 – Prohibits unfair or deceptive acts. Violations allow policyholders to sue for actual damages, treble damages for knowing conduct, and attorney’s fees.

• Texas Insurance Code Chapter 542 (Prompt Payment of Claims Act) – Sets strict timeframes for insurers to acknowledge, investigate, and pay claims. Failure exposes the carrier to 18% annual interest and attorney’s fees.

• Texas Insurance Code Chapter 542A – Governs weather-related property claims. Requires 60-day pre-suit notice and detailed damage estimates but also protects policyholders by preserving contractual rights.

• Statute of Limitations – Breach-of-contract actions must generally be filed within four years, but many policies shorten this to two. Bad-faith and deceptive practices claims must be brought within two years of the date the cause of action accrues (Tex. Civ. Prac. & Rem. Code §16.003).

Prompt Payment Deadlines You Can Enforce

• Notice of Claim – You must give prompt written notice; most policies require notice “as soon as practicable.” Document the date you first gave notice.

• 15 Business Days – Insurer must acknowledge receipt and request all necessary information (Tex. Ins. Code §542.055).

• 15 Business Days After Receiving Info – Insurer must accept or reject the claim (may extend to 45 days with written explanation).

• 5 Business Days After Acceptance – Payment must be issued (Tex. Ins. Code §542.057).

• Missed deadlines? Insurer may owe the claim amount, plus 18% annual interest and reasonable attorney’s fees.

Bad Faith Protections

Texas recognizes a common-law duty of good faith and fair dealing (see Arnold v. Nat’l Cty. Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987)). An insurer that denies coverage without a reasonable basis, fails to conduct a proper investigation, or delays payment intentionally can be liable for extra-contractual damages, mental anguish, and punitive damages.

Common Property Insurance Disputes in Texas

1. Wind, Hail, and Hurricane Damage

Severe windstorms often lead to roof leaks, lifted shingles, and subsequent water intrusion. Disputes usually involve the extent of covered damage and whether a full roof replacement is required. Under Texas law, the insurer must adopt “solid engineering or expert” justification for partial replacement. Policyholders should secure independent roofing assessments.

2. Water and Mold Damage

Houston’s subtropical climate speeds mold growth. While initial water damage may be covered, insurers often argue that resulting mold is “maintenance” or limited by policy endorsements. Read mold sub-limits carefully (commonly $5,000–$10,000). If water penetration arose from a covered peril (e.g., a broken pipe), challenge low mold caps as conflicting with the policy’s reasonable expectations doctrine.

3. Frozen Pipe Bursts (Winter Storm Uri)

State Farm v. Lavastone Capital (Tex. App.—Houston [14th Dist.] 2022) held that reasonable steps to mitigate after a covered loss are themselves covered. Keep plumbing invoices to rebut “late mitigation” arguments.

4. Fire and Smoke Losses

Disputes focus on personal property inventories and smoke damage to HVAC systems. Photograph every item and secure professional cleaning estimates.

5. Scope of Repairs/Appraisal Clause Conflicts

If you and the carrier disagree on the value of loss, the policy likely provides an appraisal remedy. Texas courts enforce these clauses strictly (Barbara Technologies Corp. v. State Farm, 589 S.W.3d 806 (Tex. 2019)). However, appraisal does not bar bad-faith claims.

Texas Legal Protections & Regulations

Statutory Deadlines You Can Use as Leverage

In addition to the prompt payment timelines already noted, Texas law grants separate deadlines for specific dispute stages:

• 90-Day Reopening – If an insurer re-opens a claim after initial payment, it must complete the investigation within 90 days (Tex. Ins. Code §542.056(d)).

• Appraisal Demand Limit – Most policies require either party to demand appraisal within 60 days of the disagreement on price.

• Statute of Repose for Contractors – Claims against contractors for faulty repairs must generally be filed within 10 years (Tex. Civ. Prac. & Rem. Code §16.008).

Appraisal Process Explained

• Written Demand – Send certified mail, quoting the policy’s appraisal provision.

• Choose Appraisers – Each side selects a competent, disinterested appraiser within 20 days.

• Umpire Selection – If appraisers cannot agree on value, they select an umpire; otherwise, a court appoints one under Tex. Civ. Prac. & Rem. Code §171.041.

• Binding Award – An award signed by any two of the three becomes binding on value, but policyholders may still litigate coverage and bad faith.

Penalties for Bad Faith

Under Chapter 541, a “knowing” violation allows recovery of up to three times actual damages. In USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018), the Texas Supreme Court clarified that a policyholder may obtain bad-faith damages even without separate breach if the insurer’s misconduct caused independent injury.

Recent Houston-Area Court Rulings

• Advance’d Temporaries, Inc. v. Charter Oak Fire Ins. Co. (S.D. Tex. 2021) – Denial without expert inspection deemed potentially in bad faith, defeating summary judgment for insurer.

• Zoya Enterprises, LLC v. Great Am. Ins. Co. (S.D. Tex. 2022) – Court allowed a prompt-payment penalty claim to proceed despite an appraisal award because insurer delayed payment more than five days post-award.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Photograph and video the mold damage, water lines on walls, and any active leaks.

• Keep a written log of all conversations with your insurer—date, time, person, and summary.

• Save receipts for mitigation (fans, dehumidifiers) and temporary housing.

2. Review Your Policy Thoroughly

Look for exclusions, coverage limits, and duties after loss. Pay special attention to “microbial growth” endorsements that cap mold coverage. If language is ambiguous, Texas follows the rule of contra proferentem—ambiguities are construed against the drafter (the insurer).

3. Obtain Independent Estimates

Carriers often rely on preferred contractors or adjusting software that skews low. Seek at least two independent contractors licensed in Texas. For mold, hire a Texas-licensed mold assessment consultant (MAC) under 16 Tex. Admin. Code §78. These experts can perform spore testing and draft a remediation protocol.

4. File a Written Complaint with TDI

If the insurer is unresponsive or violates deadlines, submit a complaint online to the Texas Department of Insurance. TDI’s Consumer Protection division investigates and pressures carriers to comply.

5. Preserve Your Right to Sue

Send a 60-day notice letter under Chapter 542A outlining:

• Specific violations (e.g., missed prompt-payment deadlines, misrepresentations).

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

• Supporting photos, expert reports, and invoices.

Send via certified mail, return-receipt requested (or electronic means agreed by insurer). Failure to give proper notice may limit fee recovery.

When to Seek Legal Help in Texas

You may handle minor claims alone, but consult a Houston insurance attorney if:

• The insurer denies coverage citing an exclusion you believe does not apply.

• You suspect the adjuster ignored key evidence or undervalued mold remediation.

• Deadlines have passed with no payment.

• Your claim involves six-figure damage or complex structural repairs.

• The carrier invokes appraisal, but refuses to pay the award.

Louis Law Group exclusively represents policyholders. Our Texas-licensed attorneys can:

• Provide a free policy review to spot hidden pitfalls.

• Send statutory demand letters that trigger prompt-payment penalties.

• Engage qualified experts (engineers, industrial hygienists) to validate your loss.

• Negotiate settlements or, if needed, file suit in Harris County District Court or federal court.

Contingency-fee arrangements mean no fees unless we recover funds. Under Texas law, prevailing policyholders can also recover attorney’s fees and interest.

Local Resources & Next Steps

Key Agencies and Courts

Texas Department of Insurance (TDI) – File complaints, verify carrier licenses, and read consumer guides. Harris County District Clerk – Search court records and file civil lawsuits. Texas Court Help – Plain-language resources on filing in Texas courts. Houston Bar Association LegalLine – Free legal advice by phone twice per month.

Checklist Before You Call an Attorney

• Gather the full policy (declarations, endorsements, exclusions).

• Organize all correspondence and estimates chronologically.

• Calculate total damages: dwelling, contents, ALE (additional living expenses).

• Note every statutory deadline the insurer missed.

• Prepare questions about fees, timelines, and potential recovery.

Strong Call to Action

If your property insurance claim has been delayed, underpaid, or denied, don’t let the carrier dictate the outcome. Call Louis Law Group at 833-657-4812 for a free case evaluation and policy review today.

Disclaimer: This guide provides general information about Texas property insurance law and is not legal advice. Laws and court decisions change. Consult a licensed Texas attorney for advice on your specific situation. Louis Law Group attorneys are licensed in Texas and practice in Houston and statewide.