Houston Mold Damage Claims Guide | Texas Property Insurance

12 min read

Introduction: Why Houston Homeowners Must Understand Mold Damage Claims

Houston’s subtropical climate—characterized by high humidity, frequent thunderstorms, and an annual hurricane threat—creates the perfect breeding ground for mold after any water intrusion. Following events such as Hurricane Harvey, Tropical Storm Imelda, or even a broken supply line, Houston homeowners routinely discover mold colonies spreading behind walls, under flooring, and inside HVAC systems. Unfortunately, insurers often minimize or deny mold damage coverage, citing exclusions, caps, or disputed causation. Understanding Texas property insurance law and your rights as a Houston policyholder is therefore critical.

This comprehensive guide—written from a homeowner-focused perspective—explains how Texas statutes, regulations, and court decisions protect you against unfair claim handling. We cover:

• Key provisions of the Texas Insurance Code that govern prompt payment, good-faith settlement, and unfair practices;

• Common mold-related dispute scenarios specific to Houston’s climate;

• Statutory deadlines, appraisal rights, and litigation time limits;

• Step-by-step actions to strengthen your claim and fight underpayment or denial;

• When to engage a Houston insurance attorney and how Louis Law Group can help.

Armed with accurate information and proactive strategies, Houston homeowners can better protect their homes—and their health—against the financial fallout of mold. If your insurer is stalling or refusing to pay what you are owed, this guide is for you.

Understanding Texas Property Insurance Law

1. Texas Insurance Code §542 – Prompt Payment of Claims

Sections 542.051–542.061, collectively known as the Prompt Payment of Claims Act, require insurers to:

• Acknowledge a claim within 15 calendar days after receiving notice;

• Begin an investigation and request all necessary items within that same 15-day window;

• Accept or reject the claim within 15 business days after receiving all requested documentation;

• Pay accepted claims within five business days (or fund within five days after settlement documents are signed).

Failure to meet these deadlines exposes the carrier to statutory interest (currently 18% per annum) and attorneys’ fees. For mold claims—where delays exacerbate damage—this statute is a powerful tool.

2. Texas Insurance Code §541 – Unfair Methods of Competition & Unfair Settlement Practices

Section 541 prohibits insurers from misrepresenting policy terms, failing to effectuate prompt, fair settlements, or compelling policyholders to sue by offering substantially less than the amount ultimately recovered. Violations allow recovery of actual damages, treble damages for knowing misconduct, and attorney’s fees.

3. Bad-Faith Common-Law Protections

Texas recognizes a common-law duty of good faith and fair dealing (first articulated in Arnold v. Nat’l County Mut. Fire Ins. Co., 1984). When an insurer unreasonably denies or delays benefits, it can be liable for extra-contractual damages—including mental anguish—in addition to policy benefits.

4. Mold-Specific Policy Caps & Endorsements

After the early-2000s mold litigation wave, many Texas carriers adopted mold sub-limits (e.g., $5,000) or excluded mold entirely unless resulting from a covered peril. However, endorsements or HO-B policies may restore broader mold coverage. Knowing your form and endorsements is step one.

Full policy language matters; consult a qualified attorney before accepting an insurer’s representation that “mold isn’t covered.”

Common Property Insurance Disputes in Texas

While this guide centers on mold, many claims involve multiple perils. The most frequent Houston disputes include:

• Wind & Hail: Gulf storms drive rain under shingles, creating hidden moisture and later mold.

• Hurricane & Tropical Storm Flooding: Category 4 winds and storm surge overwhelm roofs and windows. Insurers may argue flood vs. wind causation.

• Plumbing Leaks & Slab Failures: Old copper pipes or shifting clay soils cause sudden bursts, spawning mold within 24–48 hours.

• Fire Losses with Water Damage: Fire department suppression saturates drywall; mold follows rapidly.

• Repair Scope Disputes: Insurers approve surface cleaning when full tear-out is required to remediate mold colonies.

Each scenario raises unique coverage and causation issues. Understanding how Texas law allocates the burden of proof (insurer for exclusions, homeowner for initial damage) is crucial in negotiating fair payment.

Texas Legal Protections & Regulations

Statutory Deadlines You Must Know

• Notice of Claim to Insurer: As soon as practicable (your policy may specify 30 days). Notify in writing and keep receipts.

• Prompt Payment Deadlines (Texas Ins. Code §542): 15/15/5 rule described above.

• Statute of Limitations – Breach of Contract: 4 years under Tex. Civ. Prac. & Rem. Code §16.004.

• Statute of Limitations – Bad Faith/DTPA: 2 years from the date you knew or should have known of the unfair practice (extendable to 2+2 in limited cases).

• Appraisal Invocation: Most policies require written demand within a “reasonable time,” often interpreted as 30–60 days after impasse.

The Appraisal Process in Texas

Appraisal is a binding, contractual alternative dispute resolution mechanism limited to the amount of loss, not coverage. Key points:

• You and the insurer each select a competent appraiser; appraisers choose an umpire.

• An award signed by any two of the three is binding absent fraud or procedural irregularity (State Farm Lloyds v. Johnson, 2009).

• Appraisal does not resolve causation or policy exclusions, but courts usually enforce it before litigation.

• Insurers must still pay within five business days of receiving the signed award.

Bad-Faith Penalties and Recent Court Rulings

Key cases influencing mold and water damage disputes:

• Menchaca v. USAA (2017 & 2020): Clarified relationship between contract and extra-contractual claims—policyholder may recover under Sections 541/542 even if no breach exists, provided a statutory violation caused independent injury.

• Barbara Tech. Corp. v. State Farm Lloyds (2019): Payment of appraisal award does not extinguish insurer liability under §542; statutory interest may still accrue.

• Ortiz v. State Farm Lloyds (2019): Policyholder may pursue bad-faith claims post-appraisal when insurer acted unreasonably before award.

These decisions empower insureds to seek penalties even after appraisal, emphasizing timely, fair investigation by the insurer.

Step-by-Step Actions After a Property Insurance Dispute

1. Document the Damage Immediately

• Take high-resolution photos and video of visible mold, water stains, warped flooring, and any personal property affected.

• Maintain a daily log of musty odors, health symptoms, or ongoing moisture.

• Preserve samples if safe; professional testing may be warranted.

2. Mitigate Further Loss

• Texas policies require “reasonable steps” to prevent additional damage. Hire a certified mold remediation contractor to install drying equipment and containment barriers.

• Keep all invoices—these costs are generally reimbursable.

3. Notify Your Insurer in Writing

Call the carrier’s claims number, obtain a claim reference, and immediately send a follow-up email or certified letter summarizing:

• Date and cause of loss;

• Extent of suspected mold;

• Any emergency services you authorized;

• Request for full copy of policy and declarations.

4. Request an Advance & Keep a Repair Diary

Under §542, you may request partial payment for emergency repairs or relocation expenses (ALE). Record every interaction: date, representative’s name, promises made.

5. Obtain Independent Estimates

Carrier-retained adjusters often minimize removal scope (e.g., cleaning vs. full gut). Hire a reputable Houston remediation firm and a public adjuster or construction consultant for an unbiased Xactimate estimate.

6. Review Coverage & Endorsements

Look for:

• Mold Remediation Endorsement—may increase sub-limit from $5,000 to $50,000;

• Water Damage Exclusion—important causation disputes;

• Anti-Concurrent Causation Clause—often litigated post-hurricane.

If language is ambiguous, Texas law construes it in favor of the insured.

7. File a Complaint with the Texas Department of Insurance (TDI)

If the insurer ignores deadlines or low-balls, submit a formal complaint online through the Texas Department of Insurance. TDI’s Consumer Protection division will request a formal response from the carrier—often enough to spur action.

8. Consider Appraisal or Mediation

When the dispute is purely about dollar amount, invoke appraisal in writing, citing policy language. For coverage disputes, statutory mediation may be available for claims under residential policies at the Texas Department of Insurance.

9. Preserve Your Litigation Rights

Track the two- and four-year statutes carefully. Tolling agreements can be negotiated, but never rely on verbal assurances from adjusters. Calendar your deadlines.

When to Seek Legal Help in Texas

While many claims settle with diligent follow-up, certain red flags signal the need for a Houston insurance attorney:

• Carrier denies mold coverage despite water damage caused by a covered peril;

• Repeated requests for the same documents, delaying tactics, or low-ball offers;

• Mold remediation costs exceed policy sub-limits and carrier refuses to acknowledge endorsements;

• Claim has lingered 60+ days with no payment;

• Insurer requests intrusive or unnecessary inspections.

Louis Law Group’s Texas-licensed attorneys use the leverage of §542 interest, treble damages under §541, and recent case law to negotiate fair settlements or file suit in Harris County District Court. We manage appraisals, discovery, expert testing, and—if necessary—trial, all on a contingency-fee basis.

Local Resources & Next Steps

Contact Information

Texas Department of Insurance Consumer Help Line: 800-252-3439 Harris County District Clerk: Civil filing & docket lookup Houston Bar Association Free Legal Clinics: weekly advice for qualifying residents

• Texas Board of Legal Specialization: Verify attorney credentials

Statutory Notice Before Filing Suit

Texas Insurance Code §542A (2017 reforms) requires a 61-day pre-suit notice detailing your damages, attorney fees, and settlement demand. An attorney can draft this notice to protect your rights and avoid fee reductions.

Health Concerns & Professional Remediation

Stachybotrys (black mold) spores aggravate asthma and allergies. Texas Occupations Code Chapter 1958 mandates licensing of mold assessors and remediators. Always request a Certificate of Mold Damage Remediation (Form MDR-1) when work completes; it shields you from future insurer claims that mold existed pre-loss.

Final Disclaimer

This guide is for informational purposes only and does not create an attorney-client relationship. Laws and regulations change frequently. Consult a qualified attorney to obtain advice specific to your circumstances.

Take Action Now—Protect Your Houston Home

If your property insurance claim has been delayed, underpaid, or denied, don’t wait until hidden mold destroys your home’s value or your health. Call Louis Law Group at 833-657-4812 for a free case evaluation and policy review. Our Houston insurance attorneys fight aggressively to secure every dollar you deserve under Texas law.