Houston Guide to Texas Property Insurance Law & Mold Claims

Estimated read time: 13 min read

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

Houston sits at the crossroads of Gulf Coast humidity, tropical storm paths, and an aging housing stock. Those factors combine to make mold damage and other property losses a frequent—and costly—headache for local homeowners. Unfortunately, many policyholders discover too late that filing a property insurance claim is only half the battle. Delays, partial payments, or outright denials are common in Texas, leaving Houstonians to shoulder remediation and repair costs themselves. This comprehensive legal guide explains how Texas law protects you, what deadlines apply, and which steps you should take to preserve your rights when a mold damage or other property claim stalls. It is written from the policyholder’s perspective and is designed to empower you with clear, actionable information.

Understanding Texas Property Insurance Law

Key Statutes Every Texas Policyholder Should Know

• Texas Insurance Code Chapter 542 – Prompt Payment of Claims Act: Requires insurers to acknowledge, investigate, and pay valid claims within strict timelines. Failure can trigger statutory interest and attorney’s fees.

• Texas Insurance Code Chapter 541 – Unfair Settlement Practices: Prohibits insurers from misrepresenting policy provisions, failing to promptly settle, or refusing claims without a reasonable investigation. Violations can support “bad faith” lawsuits.

• Statute of Limitations: Most first–party property insurance lawsuits in Texas must be filed within two years of the date the insurer denies the claim or otherwise breaches the policy, although your policy may contractually shorten this period to one year.

In addition, Houston homeowners must be aware of building codes and remediation standards that can affect coverage for mold. The Texas Department of State Health Services (DSHS) regulates licensed mold assessors and remediators, which can become important if your carrier contests the scope or cost of cleanup.

Prompt Payment Deadlines in Plain English

• 15 days after written notice of a claim: the insurer must acknowledge receipt, begin investigation, and request any additional information.

• 15 business days after receiving requested info: the insurer must accept or reject the claim in writing.

• 5 business days after accepting: the insurer must pay.

If the carrier misses these deadlines without a valid reason (e.g., weather catastrophe declaration), interest accrues at 18% per year plus attorney’s fees—one of the strongest prompt-payment penalties in the nation.

For official guidance, review the Texas Insurance Code Chapter 542.

Common Property Insurance Disputes in Texas

1. Mold Damage (Houston’s #1 Hidden Menace)

Warm, humid Gulf air and frequent rain events create the perfect environment for mold colonization in attics, walls, and HVAC systems. Insurers often argue:

• Pre-existing condition: claiming the mold growth predated the covered water event.

• Maintenance exclusion: asserting improper upkeep caused moisture buildup.

• Policy sub-limits: relying on $5,000 or $10,000 mold caps even when structural repairs exceed those amounts.

Yet many Texas homeowners policies provide broader mold coverage if the mold stems from a sudden and accidental discharge of water (e.g., burst pipe). Understanding the policy language and Texas case law—such as Fiess v. State Farm Lloyds (Texas Supreme Court, 2006)—is vital.

2. Wind and Hail Damage

Severe thunderstorms and the occasional hurricane challenge roofs and siding. Disputes often arise over repair scope (patch vs. replacement) and application of cosmetic-damage endorsements.

3. Hurricane & Tropical Storm Losses

Houston’s history with events like Hurricane Harvey underscores how flood, wind, and ensuing mold claims can overlap. Coordinating National Flood Insurance Program (NFIP) and homeowners coverage is a recurring challenge.

4. Water Damage (Non-Weather)

Burst plumbing lines, appliance leaks, or HVAC condensate overflows can drench drywall and flooring. Mold remediation costs escalate quickly if the insurer delays authorization.

5. Fire & Smoke Damage

Texas carriers sometimes dispute cleaning methods, code-upgrade costs, or claim depreciation on damaged personal property.

Texas Legal Protections & Recent Court Rulings

Appraisal Provision in Most Texas Policies

An appraisal clause lets either side demand an impartial panel decide the dollar amount of loss—not coverage questions. Under Texas law, invoking appraisal tolls (pauses) certain limitations defenses, but you still must file suit timely if coverage is denied.

Practical tips:

• Demand appraisal in writing well before the statute of limitations expires.

• Choose an appraiser familiar with mold remediation standards (ANSI/IICRC S520).

• Understand you may still litigate coverage exclusions after appraisal.

Bad Faith & Extra-Contractual Claims

Under USAA Tex. Lloyds Co. v. Menchaca (Tex. 2018), policyholders may recover damages for statutory bad faith independent of (or in addition to) policy benefits if they prove a violation of Chapters 541 or 542 caused harm.

Penalties can include:

• Up to three times the amount of actual damages for knowingly committed unfair practices.

• 18% interest for prompt-payment violations.

• Reasonable attorney’s fees.

Recent Houston-Area Decisions to Know

• Hinojos v. State Farm Lloyds (5th Cir. 2021) – Reaffirmed that payment of an appraisal award does not automatically extinguish statutory bad faith claims.

• Barbara Technologies Corp. v. State Farm Lloyds (Tex. 2019) – Allowed prompt-payment damages even after appraisal when the carrier’s initial underpayment violated Chapter 542.

Step-By-Step Actions After a Property Insurance Dispute

1. Document Everything Immediately

Take high-resolution photos or video of mold growth, water intrusion points, and damaged contents. Keep dated receipts for remediation supplies and temporary housing.

2. Mitigate Further Damage (But Don’t Overstep)

Your policy requires you to prevent additional loss. Place dehumidifiers, remove saturated drywall, and board up openings, but preserve physical evidence for the adjuster when possible.

3. Obtain Independent Estimates

Hire a licensed mold assessor or IICRC-certified contractor to provide a written remediation protocol and cost breakdown. Independent bids carry weight if the insurer’s estimate seems light.

4. Review Your Policy Carefully

Note key sections: exclusions, endorsements, mold sub-limits, and the appraisal clause. Texas policies often differ on whether ensuing mold after a covered water loss is fully compensable.

5. Keep Communications in Writing

Email the adjuster a timeline of events and politely cite Chapter 542 deadlines. Written records deter backpedaling and become evidence if litigation ensues.

6. File a Formal Complaint if Needed

If the carrier drags its feet, submit a complaint with the Texas Department of Insurance Consumer Protection. TDI will contact the insurer for an explanation—often enough to jump-start stalled negotiations.

7. Track Deadlines Relentlessly

• Initial notice of claim: ASAP (most policies require "prompt" notice).

• Appraisal demand: Generally within 60–90 days after a written disagreement, but check your policy.

• Suit deadline: Two years from breach/denial unless shorter in policy.

When to Seek Legal Help in Texas

While many small disputes resolve through appraisal or supplemental payment, certain red flags suggest you should hire counsel sooner rather than later:

• The insurer insists mold was "maintenance-related" despite a sudden leak.

• Payment is below independent estimates by 30% or more.

• You receive a denial letter citing complex exclusions or anti-concurrent causation language.

• The carrier demands an Examination Under Oath (EUO) and requests extensive personal records.

An experienced Houston insurance attorney can:

• Analyze policy language and claim file for statutory violations.

• Retain credible experts to counter the insurer’s consultants.

• Invoke appraisal or file suit before deadlines expire.

• Pursue bad faith damages and attorney’s fees so you keep more of your recovery.

Louis Law Group represents homeowners statewide and maintains relationships with local adjusters, remediators, and expert witnesses familiar with Houston climate conditions. Initial consultations are free, and many cases are handled on a contingency-fee basis—meaning no fees unless we recover for you.

Local Resources & Next Steps

Texas Department of Insurance – File consumer complaints and research company disciplinary history. Texas Judiciary Online – Access Harris County district court dockets if litigation becomes necessary. Houston Bar Association – Lawyer referral and modest-means legal aid programs.

• DSHS Mold Program – Verify licenses of assessors and remediators.

Legal Disclaimer: This guide is for informational purposes only and does not create an attorney-client relationship. Laws and regulations change, and the facts of each case are unique. Consult qualified counsel regarding your specific situation.

CTA: If your property insurance claim has been delayed, underpaid, or denied—especially if mold damage is involved—call Louis Law Group at 833-657-4812 for a free case evaluation and policy review.