Houston Mold Damage Guide | Texas Property Insurance Law

14 min read

Introduction: Why Houston Homeowners Must Know Their Rights

Houston’s subtropical climate, frequent tropical storms, and aging housing stock create a perfect breeding ground for mold. Because mold damage can spread quickly and cause significant health issues, it is critical for Houston homeowners to understand how Texas property insurance law—particularly as it relates to mold—protects them. Insurance carriers often dispute mold-related claims, arguing pre-existing damage, construction defects, or lack of maintenance. When insurers delay investigation, underpay remediation costs, or issue outright denials, policyholders may face thousands of dollars in out-of-pocket repairs and lingering health risks. This guide explains your legal rights, statutory deadlines, and practical strategies to maximize recovery under Texas law, with a slight tilt in favor of protecting Houston homeowners and policyholders.

Whether you are dealing with a sudden pipe burst that led to extensive mold growth or you have discovered hidden microbial contamination after an insured water event, the Texas Insurance Code provides powerful consumer safeguards. From prompt payment statutes to bad-faith penalties, and from appraisal provisions to recent court decisions, Texas law empowers homeowners to push back against unfair claim practices. If your insurer drags its feet, questions the scope of remediation, or misapplies policy exclusions, you do not have to accept the loss. Knowledge is your first line of defense.

Key Takeaways

• Texas has strict prompt-payment deadlines (Tex. Ins. Code Chapter 542) that require carriers to acknowledge, investigate, and pay claims within set timeframes.

• Mold remediation often triggers specialized coverage limits and policy endorsements; understanding the fine print is crucial.

• Appraisal can be a fast, cost-effective alternative to litigation for disputes over the amount of loss.

• Insurers that act in bad faith may owe attorneys’ fees, interest, and extra-contractual damages.

Understanding Texas Property Insurance Law

1. Prompt Payment of Claims Act (Tex. Ins. Code §§ 542.051-542.061)

This statute imposes strict deadlines on insurers:

• 15 days to acknowledge, begin investigation, and request information.

• 15 business days after receiving all requested items to accept or deny the claim.

• 5 business days after notice of acceptance to pay the claim.

If the carrier misses these deadlines without a valid extension, it must pay statutory interest (currently 18% per annum) plus reasonable attorneys’ fees. For Houston homeowners grappling with fast-spreading mold, each day of delay can mean escalating costs. Enforcing statutory deadlines keeps the insurer accountable.

2. Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)

Policyholders are considered consumers under the DTPA. If an insurer misrepresents coverage or falsely states that mold contamination is excluded when it is not, the homeowner may sue for treble damages if the conduct was knowing or intentional.

3. Common Policy Provisions Affecting Mold Claims

• Water Damage Exclusion vs. Ensuing Loss: Some policies exclude mold resulting from long-term leaks but still cover mold that follows a sudden and accidental discharge.

• Limited Fungus Endorsement: Many Texas policies cap mold remediation coverage (often $5,000–$10,000). However, if the mold arises from a covered peril like a broken pipe, the cap may be invalid if it conflicts with mandatory Texas endorsements.

• Duty to Mitigate: Homeowners must act promptly to dry out and remediate. Document every mitigation effort to counter insurer allegations of neglect.

Common Property Insurance Disputes in Texas

While this guide focuses on mold, homeowners should be aware of other prevalent disputes under Texas property insurance law:

• Wind/Hail Damage: Houston’s severe thunderstorms produce hail that compromises roofs. Disagreements often arise over full roof replacement vs. spot repairs.

• Hurricane Claims: Hurricanes Ike (2008), Harvey (2017), and Nicholas (2021) underscored carrier reluctance to pay wind-driven rain, flood versus wind causation, and code-upgrade costs.

• Water Damage: Burst pipes (notably during Winter Storm Uri in 2021) caused widespread losses and subsequent mold growth. Insurers may argue “gradual” damage to deny coverage.

• Fire & Smoke: Disputes involve cleaning protocols, personal property valuation, and additional living expenses (ALE).

• Scope of Repairs: Adjusters may underestimate drywall removal or HVAC cleaning for mold remediation, leaving homeowners footing the bill.

Texas Legal Protections & Regulations

Statutory Deadlines

ActionDeadlineStatute Notice of Claim by InsuredAs soon as practical (policy condition)Policy language Insurer Acknowledgment15 daysTex. Ins. Code § 542.055 Insurer Acceptance/Denial15 business days after documentsTex. Ins. Code § 542.056 Payment After Acceptance5 business daysTex. Ins. Code § 542.057 Lawsuit Filing (Contract)4 years from breachTex. Civ. Prac. & Rem. Code § 16.051 Bad Faith/DTPA2 yearsTex. Bus. & Com. Code § 17.565

Appraisal Clause: Most Texas policies allow either party to demand appraisal to resolve disputes over the amount of loss. Recent Supreme Court cases like State Farm Lloyds v. Johnson reaffirmed that appraisal awards are binding absent fraud or evidence that the panel exceeded its authority. Under current law, invoking appraisal does not waive statutory interest or bad-faith claims; it tolls deadlines while appraisal proceeds.

Bad-Faith Considerations

Texas recognizes two principal causes of action:

• Common-law bad faith: Insurer’s denial without a reasonable basis.

• Statutory bad faith: Violations of Tex. Ins. Code §§ 541.060–541.061 (unfair settlement practices) and Chapter 542.

Penalties can include up to three times actual damages for knowing violations, attorneys’ fees, and statutory interest. For mold claims where early remediation is critical, insurers that delay may quickly incur liability.

Recent Court Rulings

• Barbara Technologies Corp. v. State Farm Lloyds (Tex. 2019): Appraisal does not bar insured from pursuing prompt-payment damages.

• Ortiz v. State Farm Lloyds (Tex. 2019): Insured may still sue for bad faith even after accepting appraisal payment if the carrier failed to comply with statutory duties.

• Menchaca v. USAA Texas Lloyds (Tex. 2017): Clarified the relationship between contractual and extra-contractual claims.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Take high-resolution photos and video of all mold-affected areas and any water source that triggered the growth.

• Save receipts for mitigation expenses (drying equipment, HEPA filters, professional assessments).

• Log every phone call with adjusters—note date, time, and substance.

2. Obtain Independent Estimates

Insurance adjusters often base their scope on proprietary software that may undervalue mold remediation. Hire a licensed Texas mold assessor or reputable remediation company familiar with Texas Mold Assessment and Remediation Rules (TMARR). Their report can rebut lowball estimates.

3. Invoke Appraisal When Appropriate

If the dispute is primarily about how much the repair will cost rather than whether it is covered, send a written demand for appraisal via certified mail. Name a competent, impartial appraiser within the time allowed by your policy (commonly 20–30 days). This can expedite payment.

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

If your insurer violates statutory deadlines or refuses to explain a denial, file an online complaint through the TDI Consumer Help Portal. While TDI cannot order the company to pay, it can pressure carriers to comply with the law and may identify systemic issues that lead to fines.

5. Send a Pre-Suit Notice Letter

Before filing a lawsuit, Texas law (Tex. Ins. Code § 542A.003) requires a written notice at least 61 days in advance, detailing:

• The specific complaint.

• The amount owed.

• Attorney’s fees incurred.

Failure to send this notice could result in abatement of the lawsuit, so comply meticulously.

When to Seek Legal Help in Texas

While some small dollar disputes resolve through appraisal, Houston homeowners should consult a skilled insurance attorney when:

• The insurer alleges pre-existing or wear-and-tear exclusions to deny coverage.

• Limited mold endorsements cap payout far below remediation costs.

• Delayed payment allows mold to spread, causing health issues or additional damage.

• The carrier’s experts minimize contamination by sampling only limited areas.

• Bad-faith evidence exists—misrepresentation, intimidation, or retaliation after a complaint.

Louis Law Group’s attorneys are licensed in Texas and have litigated hundreds of homeowner claims statewide. We front the costs of experts, handle pre-suit notices, and pursue statutory interest, attorneys’ fees, and policy benefits. Most cases are handled on a contingency fee basis—no recovery, no fee.

Local Resources & Next Steps

Texas Department of Insurance (TDI) Texas Insurance Code Chapter 542 Texas Judicial Branch Court Locator Houston Bar Association Lawyer Referral Service

Statutory Limitation Periods Recap

• Contractual breach: 4 years (may be shortened to 2 years by policy—check your declarations page).

• DTPA and Insurance Code bad-faith: 2 years from discovery.

• Personal property claims (conversion/negligence): 2 years.

Action Plan for Houston Homeowners

• Report mold claim to insurer in writing.

• Schedule professional mold assessment within 48 hours.

• Photograph and document all damage, including humidity readings.

• Track insurer’s statutory deadlines.

• If no fair resolution within 30–45 days, consult Louis Law Group.

Free Case Evaluation

If your property insurance claim has been delayed, underpaid, or denied—especially for mold damage—call Louis Law Group at 833-657-4812 for a free case evaluation and policy review. We fight to enforce Texas property insurance law Houston homeowners rely on.

Disclaimer

This guide is for informational purposes only and does not create an attorney-client relationship. Laws and regulations change frequently; consult a licensed Texas insurance attorney for advice about your specific situation.