Houston Guide to Texas Property Insurance Law & Mold Claim Rights

11 min read

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

Houston’s subtropical climate, proximity to the Gulf of Mexico, and booming housing market create a challenging environment for property owners. Hurricanes like Harvey, hail-laden storms, and year-round humidity frequently lead to roof leaks, water intrusion, and mold damage. When a loss occurs, most homeowners turn to their insurers for help—only to face delays, lowball offers, or outright denials. Understanding Texas property insurance law Houston is therefore not just smart; it is essential for protecting your largest investment.

This guide provides Houston policyholders with clear, step-by-step instructions, cites key provisions of the Texas Insurance Code, and outlines practical strategies for fighting back when an insurance carrier stalls or underpays. While we cover multiple dispute types, special attention is given to mold claims, which insurers often challenge on coverage and causation grounds.

Understanding Texas Property Insurance Law

Key Texas Insurance Code Provisions

• Chapter 542 – Prompt Payment of Claims Act: Requires insurers to acknowledge, investigate, and pay valid claims within strict deadlines. Failure triggers 18% annual penalty interest plus attorney’s fees.

• Chapter 541 – Unfair Settlement Practices: Allows recovery of actual damages, treble damages for knowing violations, and attorney’s fees if an insurer acts in bad faith.

• Section 542A: Applies to certain weather-related claims (wind, hail, hurricane). Sets pre-suit notice requirements and proportionate-responsibility standards for adjusters.

• Appraisal Clauses: Most Texas policies include an appraisal provision letting either party demand an independent valuation when the only dispute is amount, not coverage.

Prompt Payment Deadlines

• 15 days to acknowledge the claim and request needed information.

• 15 business days after receiving documents to accept or reject.

• 5 business days after agreeing to pay to issue the check.

• For weather-related catastrophes, the Texas Department of Insurance (TDI) may extend each deadline by 15 additional days.

Missed deadlines allow policyholders to seek penalty interest and fees under §542.060.

Bad Faith in Texas

Texas courts recognize a common-law duty of good faith and fair dealing. Leading cases include Arnold v. National County Mutual Fire Insurance Co. (1989) and USAA Texas Lloyds Co. v. Menchaca (Tex. 2017). An insurer may act in bad faith by refusing to pay without reasonable investigation, misrepresenting facts or policy provisions, or failing to settle promptly when liability is reasonably clear.

Common Property Insurance Disputes in Texas

1. Mold Damage Claims

Houston’s humidity and frequent water events make mold one of the most contentious claim types. Key challenges include proving that water intrusion was sudden and accidental (covered) rather than gradual (excluded). Insurers also limit mold remediation coverage through sub-limits (e.g., $5,000 cap) or policy endorsements. Documentation immediately after discovering water is critical.

2. Wind & Hail Roof Damage

Severe thunderstorms spawn roof-damaging hail with alarming regularity. Disputes often arise over whether shingles are merely cosmetic or functionally damaged, whether a full replacement or spot repair is warranted, and how to price code upgrades.

3. Hurricane & Flood Losses

Although hurricane wind damage is covered by homeowners policies, flooding requires separate National Flood Insurance Program (NFIP) coverage. Insurers sometimes conflate the two, attributing all damage to excluded flood waters. Retain independent experts to separate wind-driven rain and structural wind damage from flood.

4. Fire & Smoke

Carriers may dispute scope of smoke cleaning, personal-property valuations, or ALE (Additional Living Expense) time frames. Prompt inventory of all damaged contents is essential.

5. Scope & Pricing Disagreements

Even when coverage is accepted, insurers may apply below-market pricing or omit code upgrades required by the City of Houston Building Code, leading to significant shortfalls.

Texas Legal Protections & Regulations

Statutory Deadlines & Limitations

• Notice of Claim: Most policies require notice promptly or within 30 days. Prompt is generally interpreted as a reasonable time unless prejudice can be shown.

• Limitations Period: Texas Insurance Code Ch. 541 actions must be filed within 2 years from the date the unfair act occurred or was discovered, plus 180-day tolling permitted by §541.162.

• Contract claims carry a 4-year statute of limitations unless the policy shortens it to no less than 2 years and 1 day, which is enforceable.

Appraisal Process

• Either side may demand appraisal in writing. Many policies do not specify time limits, but Texas courts require a demand within a “reasonable time.”

• Each party selects a competent, disinterested appraiser within 15 days of demand.

• The two appraisers pick an umpire. If they cannot, a court such as the Harris County District Court can appoint one.

• A decision signed by any two of the three (both appraisers or an appraiser and umpire) binds both parties absent evidence of fraud or procedural unfairness.

Appraisal addresses amount of loss only. Coverage or policy interpretation disputes may still proceed to litigation.

Penalties for Bad Faith & Delay

Under §542.060, insurers that violate the Prompt Payment statutes owe:

• 18% per-annum penalty interest

• Reasonable attorney’s fees

Chapter 541 permits treble damages if the carrier’s conduct is knowing or intentional. The Supreme Court of Texas in Menchaca clarified that extra-contractual damages must flow from a policy breach or independent injury.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Photograph and video the damage from multiple angles, including serial numbers of damaged appliances.

• Keep receipts for emergency repairs and mitigation (e.g., water extraction, dehumidifiers). Texas policies require reasonable steps to protect property from further damage.

• Create a written timeline: date of loss, date reported, adjuster visits, communications.

2. Request Your Certified Policy Package

Ask the insurer for a complete, certified copy of the policy—including declarations, endorsements, and exclusions. You cannot evaluate coverage without it.

3. Obtain Independent Estimates

Hire licensed Houston contractors or public adjusters to draft a comprehensive repair estimate adhering to local building codes. Insurer line-item software (e.g., Xactimate) often underprices Houston labor and material rates.

4. Track Statutory Deadlines

Create calendar reminders for every Prompt Payment deadline. If an insurer fails to meet a deadline, send a polite but firm written inquiry referencing Texas Insurance Code §542.

5. File a Complaint with TDI

If negotiations stall, file an online complaint with the Texas Department of Insurance. TDI will request a response from the carrier, often prompting faster action.

6. Consider Appraisal—But Beware

Although appraisal can resolve valuation disputes quickly, entry into appraisal may waive certain bad faith claims. Consult a Houston insurance attorney before signing any appraisal form.

When to Seek Legal Help in Texas

Many homeowners attempt to handle disputes alone but quickly encounter carrier stonewalling. You should contact counsel when:

• The insurer denies or underpays after you provide independent estimates.

• You suspect misrepresentation of policy provisions (e.g., wrongful mold exclusions).

• The carrier delays past statutory deadlines.

• You receive a broad reservation-of-rights letter or Examination Under Oath (EUO) request.

• You are unsure whether to invoke appraisal or pursue litigation.

Louis Law Group aggressively represents Houston policyholders statewide. Our attorneys are licensed in Texas and focus solely on property damage insurance disputes, including complex Texas property damage claims for mold, hurricane, hail, and fire losses. We advance all case costs, and you pay nothing unless we recover.

Local Resources & Next Steps

Texas Insurance Code Chapter 542 Harris County District Clerk – file property insurance lawsuits or motions to appoint an appraisal umpire. Houston Bar Association LegalLine – free brief attorney consultations. TDI Consumer Complaint Form

Take Action Now: 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. Time limits apply—protect your rights today.

Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. Consult a licensed Texas attorney for advice regarding your specific situation.