Houston Guide to Texas Property Insurance Law on Mold

Estimated reading time: 11 min read

Introduction: Why Houston Homeowners Must Know Their Rights

Houston’s subtropical climate and frequent severe weather make mold growth a common—and costly—problem for property owners. Whether mold follows a burst pipe after a winter freeze, water intrusion from a hurricane, or long-term roof leaks, insurers often push back on paying the full cost of remediation. Understanding Texas property insurance law empowers you to push back when your carrier delays, underpays, or outright denies your mold damage claim.

This guide, written for Houston homeowners and policyholders, explains:

• Key provisions of the Texas Insurance Code that protect you, including prompt-payment deadlines and bad-faith penalties.

• Common insurance disputes involving mold, wind, hail, hurricane, and water damage in the Gulf Coast region.

• Practical, step-by-step actions to preserve your claim, utilize the appraisal process, and escalate disputes.

• When and how to contact an experienced Houston insurance attorney—such as Louis Law Group—to level the playing field.

Disclaimer: This guide is for general informational purposes only and does not create an attorney-client relationship. For advice on your specific situation, consult qualified legal counsel licensed in Texas.

Understanding Texas Property Insurance Law

Texas Insurance Code & Prompt Payment Statute

Texas gives policyholders some of the strongest statutory protections in the country. The Texas Insurance Code Chapter 542—often called the Prompt Payment of Claims Act—requires insurers to:

• Acknowledge your claim in writing within 15 calendar days of receipt.

• Begin an investigation within the same 15-day window.

• Accept or reject the claim in writing within 15 business days after receiving all requested information (extended to 30 days if the company suspects arson).

• Pay an accepted claim within 5 business days after notice of acceptance.

If the carrier misses these deadlines, it may owe statutory interest of 18% per year on the amount owed plus reasonable attorney’s fees.

Bad Faith & Unfair Settlement Practices

Texas Insurance Code Chapter 541 prohibits insurers from engaging in unfair or deceptive acts, such as:

• Denying coverage without a reasonable investigation.

• Misrepresenting policy terms or facts.

• Failing to offer a prompt, fair, and equitable settlement when liability is clear.

Proving bad faith can entitle you to treble damages—three times the amount of your actual loss.

Statute of Limitations

Texas generally gives policyholders two years from the date the unfair act occurred—or from when you reasonably discovered it—to file suit for bad faith or prompt-payment violations (Tex. Ins. Code §541.162 & §542.060). Policies may contain separate “suit limitation” clauses for breach-of-contract actions, often set at two years and one day. Always confirm the timeframe in your policy.

Common Property Insurance Disputes in Houston

Although this guide focuses on mold, many disputes overlap because mold often follows water or storm damage. Here are the most frequent conflicts we see in the Houston area:

Mold Damage Claims

Insurers frequently argue mold is an excluded or limited peril. While many policies cap mold remediation at $5,000–$10,000, Texas law requires carriers to follow their own endorsements and any state-mandated mold provisions. When water damage is a covered peril, resulting mold may also be covered under the “ensuing loss” doctrine, subject to policy limits or sub-limits.

Wind & Hail Losses

Spring hailstorms can destroy roofs and allow water infiltration—a precursor to hidden mold in attic spaces. Insurers may dispute roof replacement versus patching, leading to underpayment.

Hurricane & Tropical Storm Damage

Houston’s proximity to the Gulf exposes homeowners to hurricanes like Harvey (2017) and Ike (2008). Hurricanes can drive rain through vents or windows, causing widespread mold within days.

Winter Freeze & Burst Pipes

The 2021 Texas freeze proved cold snaps are a real risk. Burst pipes saturate insulation and drywall, creating mold incubators if not dried quickly.

Fire & Smoke Damage

Firefighting efforts often leave a soaked structure; residual moisture leads to mold on charred framing if remediation stalls.

Texas Legal Protections & Key Regulations

Appraisal Clause and Timelines

Most Texas homeowner policies include an appraisal clause—an alternative dispute resolution mechanism to settle value disagreements.

• Either party may invoke appraisal in writing once a dispute arises.

• Each side appoints a competent, impartial appraiser within the timeline specified (commonly 20 days).

• The two appraisers select an umpire; if they cannot agree, a court in Harris County may appoint one.

• A decision signed by two of the three participants is binding as to the amount of loss but not coverage.

Appraisal can be faster than litigation, but policyholders should consult counsel beforehand because certain coverage defenses survive the process.

Notice of Claim & Proof-of-Loss Deadlines

Policies often require notice of loss “as soon as practicable” and a sworn proof-of-loss within 60–90 days. Failure to comply may allow a carrier to deny the claim, but Texas courts typically require the insurer to show prejudice—that the delay impaired its investigation—to void coverage.

Recent Texas Court Rulings on Mold & Bad Faith

• Menchaca v. USAA Texas Lloyds, 545 S.W.3d 479 (Tex. 2018): Clarified that policyholders can obtain extra-contractual damages for statutory violations even when no breach of contract exists, provided the violation caused independent injury.

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019): Confirmed that appraisal awards do not always bar bad faith claims if the insurer’s pre-appraisal conduct was actionable.

• Cameron Int’l Corp. v. Liberty Ins. Underwriters, 735 F.3d 349 (5th Cir. 2013): Held that ensuing mold damage can be covered when the initial water peril is covered.

Regulatory Oversight

The Texas Department of Insurance (TDI) licenses insurers and enforces prompt-payment rules. Complaints filed with TDI often expedite carrier responses and build a paper trail for later litigation.

Step-by-Step Guide After a Property Insurance Dispute

1. Document Immediately

• Take date-stamped photos and videos of visible mold growth, moisture stains, and the water source.

• Maintain a written log of all communications with your insurer—names, dates, summaries.

• Keep receipts for repair materials, temporary lodging, and professional remediation services.

2. Mitigate Further Damage

Texas policies obligate policyholders to prevent additional loss. Hire certified mold remediators to dry the premises. Save invoices as proof of mitigation; the insurer must reimburse reasonable costs.

3. Obtain Independent Estimates

Carrier adjusters may undervalue mold remediation by ignoring hidden cavities or HVAC contamination. Solicit multiple bids from licensed contractors who specialize in mold—this will help during appraisal or negotiation.

4. Review Your Policy

Look for:

• Mold sub-limits or endorsements.

• Exclusions tied to maintenance neglect (insurers often misapply these).

• Suits limitation clause and appraisal language.

5. File a Formal Written Complaint with TDI

If your claim exceeds prompt-payment deadlines or you suspect unfair practices, submit a complaint online via the TDI portal. Attach your correspondence timeline and proof of loss. Carriers typically respond to TDI within 15 days.

6. Invoke Appraisal (If Appropriate)

If the only sticking point is the dollar value, a timely appraisal demand can break the stalemate. Include a preferred appraisal deadline and name your appraiser in the letter.

7. Preserve Bad Faith Evidence

Keep all emails, denial letters, and low-ball estimates. These documents may establish bad faith under Texas Insurance Code §§541 and 542.

When to Seek Legal Help in Texas

You can—and often should—retain counsel as soon as you sense resistance from your insurer. A seasoned Houston insurance attorney will:

• Interpret complex mold exclusions and endorsements.

• Draft appraisal demands and select qualified appraisers.

• Send statutory demand letters under Texas Insurance Code §541.154 (required 60 days before filing suit), tolling certain deadlines.

• Negotiate for prompt, fair settlements or file lawsuit in Harris County District Court.

Louis Law Group focuses on homeowner insurance dispute Texas cases. Our attorneys are licensed in Texas and ready to:

• Provide a free policy review and claim analysis.

• Pursue breach-of-contract, prompt-payment, and bad-faith claims.

• Advance litigation costs—no fee unless we recover for you.

If your property insurance claim has been delayed, underpaid, or denied, call 833-657-4812 for a free case evaluation and policy review.

Local Resources & Next Steps

Texas Department of Insurance Consumer Help U.S. District Court for the Southern District of Texas – Houston Division Harris County District Courts Houston Bar Association Lawyer Referral Service

Every mold claim is fact-specific, but prompt action, solid documentation, and knowledge of Texas property insurance law Houston standards give you leverage. Don’t allow the insurer to dictate the outcome. Contact Louis Law Group today at 833-657-4812 for steadfast representation.

This material is © 2024 Louis Law Group. Reproduction permitted with attribution.