McKinney Guide to Texas Property Insurance Law & Mold Claims

Estimated read time: 14 min

Introduction: Why Texas Property Insurance Knowledge Matters in McKinney

Few things feel more personal than damage to your home. For McKinney homeowners, understanding how Texas property insurance law works can be the difference between a fully funded repair and a lingering financial burden. Whether you’re battling mold damage after a hidden leak, negotiating hail repairs common to North Texas, or fighting a delayed claims check, the rules that govern insurers are largely set by the Texas Department of Insurance (TDI) and the Texas Legislature. Insurers must follow strict deadlines, act in good faith, and abide by policy language. Unfortunately, underpayments, slow-walking, and outright denials happen all the time—especially when specialty losses like mold are involved. This comprehensive guide gives McKinney residents the legal framework, practical steps, and local resources needed to stand up to insurance carriers. While we touch on many types of losses, we place special focus on mold damage—a uniquely frustrating peril because it can be excluded, sub-limited, or mischaracterized by adjusters. The tips below are deliberately written with a slight bias toward policyholders to help level a playing field that often favors the insurance industry.

Key Takeaways for McKinney Homeowners

• Texas law imposes strict prompt-payment deadlines (Texas Insurance Code Chapter 542) and penalties for delay.

• Many policies cap mold coverage, but Texas courts have held carriers liable when they mishandle investigation or fail to disclose limitations clearly.

• You typically have two years from the date of a Chapter 542 violation and four years for breach-of-contract suits, so timing is critical.

• The appraisal clause can be a fast, cost-effective dispute resolution tool—but only if demanded correctly and on time.

• Louis Law Group offers free case evaluations for McKinney homeowners at 833-657-4812.

Understanding Texas Property Insurance Law

1. The Texas Insurance Code and Prompt Payment Statutes

Texas Insurance Code §§ 542.051–542.061—often called the Prompt Payment of Claims Act—requires an insurer to:

• Acknowledge, investigate, and request all necessary items within 15 days of receiving your claim (extended to 30 days during a catastrophe).

• Accept or reject the claim within 15 business days after receiving all requested documentation (extendable to 45 days with written explanation).

• Pay accepted amounts within 5 business days of the decision.

Failure to obey these deadlines triggers penalty interest—currently 18% per year—plus attorney’s fees. When insurers drag their feet on potentially toxic mold losses, this interest adds up quickly and can be a potent negotiation tool.

2. Bad-Faith Protections

Under Texas Insurance Code Chapter 541 and the landmark case Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d 165 (Tex. 1987), a carrier acts in bad faith when it unreasonably denies or delays a claim. Examples include:

• Ignoring contractor mold reports or infrared moisture scans.

• Misstating policy language (e.g., saying mold is excluded when a limited sub-limitation applies).

• Offering a settlement that is drastically below independent estimates without reasonable explanation.

Bad-faith findings can yield extra-contractual damages, mental-anguish damages, and punitive damages—powerful leverage for policyholders.

3. Policy Language & Mold Endorsements

After the 2001 mold crisis, most Texas insurers added mold sub-limits—often $5,000–$10,000—unless you purchased a buy-back endorsement. Yet Texas courts (e.g., Lloyd’s London v. Menchaca, 545 S.W.3d 479 (Tex. 2018)) stress that policy conditions must be clear and conspicuous. If your declarations page lists “Mold Remediation – $0” but the policy booklet buries exceptions, your lawyer may argue ambiguity in your favor.

Common Property Insurance Disputes in Texas

Below is a snapshot of disputes our clients in McKinney—and across Collin County—frequently encounter:

Wind & Hail Damage

North Texas leads the nation in hail claims. Insurers often call legitimate roof bruising “cosmetic” or blame “wear and tear” to avoid full replacement.

Water & Mold Damage

A small pipe leak behind drywall can spawn mold colonies within 24–48 hours. Disputes arise over:

• Whether mold is a covered peril or excluded by the policy.

• The scope of remediation (e.g., removing and replacing cabinets vs. partial cleaning).

• Additional living expense (ALE) when a home is uninhabitable due to mold remediation.

Hurricane & Severe Storm Claims

While McKinney is inland, remnants of Gulf storms still bring torrential rains and straight-line winds. Tropical moisture accelerates fungal growth, making mold a secondary but costly loss.

Fire & Smoke Damage

Post-fire water used to extinguish flames often creates hidden moisture that spawns mold weeks later. Insurers may try to close the file before this secondary damage materializes.

Scope of Repair & Underpayment

Even when coverage is acknowledged, carriers low-ball labor, fail to match materials, or refuse to pay overhead and profit (O&P) despite contractor estimates.

Texas Legal Protections & Regulations

Statutory Deadlines and Limitations

• Notice of claim: Most policies require “prompt” or “as soon as practicable” notice. Delay can give the insurer a late-notice defense.

• Appraisal demand: Typically must be made within a “reasonable time” after a dispute arises. Courts often treat one year as reasonable but sooner is safer.

• Chapter 542 suit: Two years and one day from the date the insurer’s violation occurred.

• Breach of contract: Four years from the date of breach unless shortened to two years by policy (allowed so long as clearly stated).

• Bad faith (Chapter 541): Two years from the unfair act or the date it should reasonably have been discovered.

The Appraisal Process

Most Texas HO-3 policies allow either side to invoke appraisal to resolve price disputes. Steps include:

• Written demand naming your appraiser.

• Insurer responds, naming its appraiser within 15 days.

• Two appraisers select an umpire; if they can’t within 15 days, either party may petition a Collin County district court to appoint one.

• An award signed by any two of the three participants becomes binding absent fraud.

Appraisal generally cannot determine coverage (e.g., whether mold is excluded) but is powerful for pricing disputes.

Bad Faith & Recent Case Law

In Garcia v. State Farm Lloyds, No. 05-19-00375-CV (Tex. App.—Dallas 2021), the Fifth Court of Appeals allowed bad-faith claims to survive even after an appraisal award, noting that pre-appraisal misconduct—including low-balling and delayed inspections—could still violate Chapter 541. McKinney homeowners therefore shouldn’t assume appraisal ends all legal recourse.

Penalties & Interest

Chapter 542 penalties equal 18% annual interest plus reasonable attorney’s fees. For a $50,000 mold remediation claim delayed one year, the penalty alone approaches $9,000—creating strong settlement leverage.

Steps to Take After a Property Insurance Dispute

1. Document Immediately

• Photograph and video all visible damage, moisture meters, and mold growth.

• Keep samples of removed drywall or flooring where feasible (store in sealed bags).

• Log every call with the insurer—date, time, representative, and summary.

2. Mitigate and Preserve

Texas policies impose a “duty to mitigate”. Engage a licensed water-remediation firm quickly to dry saturated areas and set up air scrubbers. Save invoices; they’re reimbursable under “reasonable and necessary” expenses.

3. Obtain Independent Estimates

Carrier adjusters often rely on pricing software that undervalues labor rates in fast-growing cities like McKinney. Secure at least two contractor bids plus, for mold, a protocol from a licensed mold assessor under Texas Occupations Code Chapter 1958.

4. Review Your Policy & Endorsements

Look for:

• Mold sub-limits or exclusions.

• Water damage limitations (e.g., 14-day hidden leak exception).

• Appraisal language and time frames.

5. File a Complaint with TDI

If your insurer stalls or refuses to explain a denial, file an online complaint with the TDI Consumer Protection division. Attach photos, estimates, and correspondence. The regulator will request a written response from your insurer within 15 days—often breaking logjams.

6. Track Deadlines

Create a calendar of all statutory and policy deadlines. Missing an appraisal or suit-limitation date can extinguish valuable rights.

7. Consider an Appraisal Demand

For pure pricing disputes—say, your contractor estimates $25,000 while the insurer offers $8,000—appraisal can yield a fast, binding award without litigation costs.

8. Seek Legal Counsel Early

As soon as a claim feels adversarial—inadequate offers, ignored evidence, or complex coverage issues such as mold—consult a qualified attorney. Early legal intervention can stop bad-faith conduct and preserve penalty claims.

When to Seek Legal Help in Texas

Insurance policies are contracts drafted by insurers with armies of lawyers. Having your own advocate levels the field. Consider hiring a McKinney insurance attorney when:

• Your claim is denied or partially denied without a specific policy citation.

• The carrier refuses to cover mold testing or remediation despite visible growth.

• Settlement offers don’t cover contractor estimates.

• The adjuster keeps changing or you can’t get status updates.

• You receive a reservation-of-rights letter alleging policy breaches.

Louis Law Group represents only policyholders—never insurers. Our Texas-licensed attorneys negotiate directly with carriers, invoke appraisal or arbitration when appropriate, and, if necessary, file suit in Collin County or federal court. We front costs and work on contingency, so you pay nothing unless we recover money 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

Regulatory & Government Agencies

Texas Department of Insurance Consumer Help Line – 800-252-3439 Texas Insurance Code – Prompt Payment Chapter 542 Texas Judicial Branch – Find Collin County district courts for appraisal-umpire petitions or lawsuits. Collin County Bar Association – Lawyer referral and pro bono resources.

Local Climate Risks That Drive Claims

McKinney’s humid subtropical climate, rapid development, and clay soil create unique risks:

• Spring hailstorms averaging 1.75-inch stones cause roof punctures that later leak, fostering mold.

• Flash floods along Wilson Creek can infiltrate slab foundations, leading to hidden moisture and fungal growth.

• Arctic freeze events like February 2021’s Winter Storm Uri burst pipes, leaving extensive water and mold damage.

Checklist Before You Call Louis Law Group

• Gather your complete policy and any endorsements.

• Compile photographs, moisture-meter readings, and mold lab results.

• List all claim-related communications, with dates.

• Have independent contractor estimates ready.

With this information in hand, our attorneys can give immediate, concrete feedback on potential recovery, statutory penalties, and next steps.

Legal Disclaimers

This guide is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. Every claim is fact-specific; consult a qualified lawyer regarding your particular situation. Louis Law Group’s attorneys are licensed in Texas and practice in state and federal courts across the state. Past results do not guarantee future outcomes.

Conclusion & Call to Action

You bought insurance for peace of mind, not a battle of attrition. If your mold, water, hail, or fire claim in McKinney has been delayed, underpaid, or denied, you have powerful rights under Texas law—rights that insurers hope you never learn. Don’t go it alone.

Take action today: Call Louis Law Group at 833-657-4812 for a free case evaluation and comprehensive policy review.