Houston Mold Damage Guide: Texas Property Insurance Rights

11 min read

Introduction: Why Houston Homeowners Must Know Their Rights

Houston’s subtropical climate, frequent hurricanes, and high humidity create a perfect environment for mold growth after water intrudes into a home. Whether the moisture comes from a broken pipe, roof leak, or storm-driven floodwater, mold can spread quickly—often before an insurer finishes processing a claim. Unfortunately, many Texas policyholders encounter delays, underpayments, or outright denials when they submit mold damage claims. Carriers may dispute whether the mold resulted from a covered peril, question the cost of remediation, or rely on policy exclusions buried in the fine print.

Understanding Texas property insurance law is therefore essential for Houston homeowners. This guide—written slightly in favor of policyholders—explains Texas statutes, deadlines, and legal remedies that protect you when an insurer drags its feet or refuses to pay what your claim is worth. You will also find step-by-step instructions to preserve evidence, trigger statutory penalties, and escalate disputes if needed. Although targeted at mold damage claims, the principles apply broadly to wind, hail, hurricane, fire, and freeze losses common along the Gulf Coast.

Key takeaway: Texas law, especially Chapters 541 (bad faith) and 542 (prompt payment) of the Texas Insurance Code, provides powerful remedies—including interest penalties, attorney’s fees, and treble damages—when carriers mishandle claims. Knowing how to invoke these protections can make the difference between a fast, fair settlement and months of stress.

Understanding Texas Property Insurance Law

1. Texas Insurance Code: Chapters That Matter Most

• Chapter 541 – Unfair Methods of Competition and Unfair or Deceptive Acts or Practices: Allows homeowners to sue for bad-faith claim handling. Violations can lead to actual damages, court costs, and up to three times the amount of damages if the carrier acted knowingly.

• Chapter 542 – Prompt Payment of Claims Act (PPCA): Imposes strict deadlines for acknowledging, investigating, and paying claims. If the carrier misses any statutory deadline without a valid reason, it must pay 18% annual interest on the amount owed plus reasonable attorney’s fees.

• Chapter 542A – Weather-Related Claims: Applies to property damage caused by weather events (windstorm, hail, hurricanes). It requires a presuit notice and limits attorney’s fees if certain conditions are not met, but it also prevents insurers from quickly removing the case to federal court when a local adjuster is named as a defendant.

2. Statute of Limitations in Texas Insurance Disputes

Texas typically provides:

• Two years to sue for unfair claim practices under Chapter 541 (from the date you knew or should have known of the violation).

• Four years to sue for breach of the insurance contract.

• Always check your policy. Some include a contractual limitations period, often set at two years and one day from the date of loss. Courts generally enforce shorter contractual periods if they are conspicuous and comply with Texas law.

3. “Prompt Payment” Deadlines at a Glance

• 15 days (extendable to 30 days during catastrophes) to acknowledge the claim after receiving written notice.

• 15 additional days to accept or deny the claim after receiving all requested information (the period extends to 45 days in certain circumstances).

• Five business days to make payment once the claim is accepted.

Failure to comply triggers interest penalties under Texas Insurance Code § 542.

4. Bad Faith Standards in Texas

Since Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987), Texas recognizes a common-law duty of good faith and fair dealing. Insurers must promptly investigate and reasonably settle claims. The Texas Supreme Court clarified in USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018), that contractual damages are still required, but policyholders can recover extra-contractual damages if bad faith caused independent injury or if another statutory path (e.g., Ch. 542) applies.

Common Property Insurance Disputes in Texas

1. Mold Damage

Mold claims are notoriously challenging. Many policies limit coverage or cap remediation costs unless mold stems from a covered peril (e.g., a sudden burst pipe). Insurers often argue that mold resulted from “long-term seepage,” an excluded peril, or that the homeowner failed to mitigate damages. In Houston’s humidity, even minor leaks can produce significant mold in days, leading to costly remediation, relocation expenses, and health issues. Disputes frequently center on:

• Whether the moisture intrusion was sudden and accidental.

• The scope and cost of professional mold remediation.

• Additional living expenses while the home is uninhabitable.

2. Wind and Hail Damage

Texas leads the nation in hail events, and Houston often experiences windstorms associated with tropical systems. Typical disputes involve roof damage assessments, cosmetic vs. functional damage, and depreciation calculations.

3. Hurricane & Tropical Storm Losses

From Hurricane Harvey in 2017 to Tropical Storm Imelda in 2019, Gulf Coast homes face massive wind-driven rain and resulting water intrusion. Disputes arise over overlapping wind vs. flood coverage and anti-concurrent causation clauses.

4. Freeze and Water Damage

Winter Storm Uri (2021) demonstrated that Houston is not immune to freezing temperatures. Burst pipes often lead to both water and mold damage, with insurers disputing mitigation costs and dried-in place protocols.

5. Fire and Smoke Claims

Beyond structural damage, soot particles can enter HVAC systems, requiring costly remediation. Insurers may undervalue personal property or deny smoke contamination claims.

Texas Legal Protections & Regulations

1. Appraisal Clause and Timelines

Most Texas policies contain an appraisal provision to resolve disagreements over the amount of loss. Either party can demand appraisal, typically in writing. While policy language controls, many forms require:

• 20 days for each side to appoint an appraiser after receipt of the appraisal demand.

• 15 days for the two appraisers to select an umpire (or a judge will appoint one).

• The award, once signed by any two panel members, becomes binding absent fraud or procedural irregularity.

Remember: appraisal determines value, not coverage. If the insurer claims the loss is excluded, you may need litigation or a Texas Department of Insurance (TDI) complaint to resolve coverage.

2. “Notice and Opportunity to Inspect” Rules

Section 542A.003 requires policyholders to give 60 days’ presuit notice describing the acts complained of, the amount owed, and attorney’s fees incurred. Failure to allow inspection can reduce recoverable damages. Therefore, send a detailed notice letter before filing suit.

3. Penalties for Bad Faith

• 18% annual interest under the PPCA.

• Treble damages under Chapter 541 if the insurer acted knowingly.

• Attorney’s fees and court costs for prevailing policyholders.

4. Recent Texas Court Rulings

• Almond v. State Farm Lloyds, 2023 WL 1802803 (Tex. App.—Houston [14th Dist.]) reaffirmed that an insurer may still be liable for PPCA interest even after it voluntarily pays appraisal.

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) held that an appraisal payment does not, by itself, immunize insurers from PPCA liability.

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) clarified that accepting appraisal does not waive the right to litigate bad-faith causes of action.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Photograph and video all damage (including areas with visible mold, water lines, or roof damage).

• Preserve receipts for emergency repairs, remediation, dehumidifiers, and additional living expenses (ALE).

• Keep a claim diary: log every phone call, email, and inspection, noting the date, time, and representative’s name.

2. Mitigate Damages

Texas policies require policyholders to protect property from further damage. Reasonable steps may include turning off water, hiring a water-extraction company, or covering a damaged roof. Document costs thoroughly; they are typically reimbursable.

3. Obtain Independent Estimates

Carriers often rely on preferred vendors who may lowball repair scopes. Get independent estimates from licensed mold remediators or general contractors experienced in Texas Mold Assessment and Remediation Rules (TMARR). Compare line items—especially for containment, HEPA filtration, and post-remediation clearance tests.

4. Review Your Policy Endorsements

Some Texas homeowners add a “mold buy-back” endorsement that increases the remediation cap. Confirm your sub-limits and exclusions. If you cannot locate a complete, certified copy of your policy, demand one in writing—insurers must provide it under Texas law.

5. File a Complaint with the Texas Department of Insurance

If negotiations stall, you can submit an online complaint with the Texas Department of Insurance (TDI). TDI will request a written response from the carrier, often prompting faster action. Complaints also create a paper trail valuable in later litigation.

6. Preserve Deadlines

Mark your calendar for the two-year statute under Chapter 541 and any policy-based limitation. Send presuit notice letters early to avoid last-minute rush.

When to Seek Legal Help in Texas

Consider contacting a Houston insurance attorney when:

• You receive a partial denial or the adjuster claims the mold is excluded.

• The carrier invokes appraisal but disputes coverage.

• The claim surpasses policy sub-limits and the insurer refuses to acknowledge endorsements.

• You suspect unfair settlement practices, such as lowball offers or delayed inspections.

Louis Law Group focuses on Texas property damage claims. Our attorneys are licensed in Texas courts and experienced in mold litigation. We handle presuit notices, appraisal objections, and lawsuits under Chapters 541, 542, and 542A. Because we work on contingency, you pay no fees unless we recover.

Local Resources & Next Steps

Texas Department of Insurance (TDI) – File complaints, review consumer guides, and verify adjuster licenses. Harris County District Clerk – Search civil filings and obtain copies of your case docket. Houston Volunteer Lawyers – Free legal aid for qualifying residents. Texas Insurance Code – Full text of Chapters 541, 542, and 542A.

Legal Disclaimer: This guide is provided for informational purposes only and does not constitute legal advice. Laws and regulations change, and the facts of every case are unique. Consult a qualified attorney to obtain advice for your specific situation.

Ready to protect your home and your rights? 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. Our Texas team is standing by to fight for the compensation you deserve.