Mold Damage Guide: Texas Property Insurance Law San Antonio

13 min read

Introduction: Why San Antonio Homeowners Need to Understand Texas Property Insurance Law

Whether you own a restored bungalow in Monte Vista or a newly built home in Stone Oak, mold can wreak havoc on your property. San Antonio’s hot, humid summers and flash-flooding rains create ideal conditions for hidden moisture and rapid mold growth. Unfortunately, many insurers still delay, underpay, or deny valid mold claims despite clear protections in the Texas Insurance Code. This comprehensive guide explains how Texas law safeguards policyholders, outlines common dispute scenarios, and provides practical, step-by-step advice for San Antonio homeowners determined to secure full and prompt payment for their mold-related losses.

Key takeaways:

• Texas imposes strict deadlines on insurers through the Prompt Payment of Claims Act (Texas Insurance Code Chapter 542).

• Homeowners can invoke the policy’s appraisal clause when there is a disagreement on valuation or scope of repairs.

• San Antonio policyholders may recover interest, attorney’s fees, and even punitive damages if an insurer acts in bad faith.

• Quick documentation, professional remediation estimates, and strategic legal help can significantly improve claim results.

Understanding Texas Property Insurance Law

1. Texas Insurance Code — The Backbone of Policyholder Rights

Several chapters of the Texas Insurance Code provide strong remedies for homeowners:

• Chapter 542: Prompt Payment of Claims Act. Insurers must acknowledge, investigate, and pay or deny a claim within specific time frames, typically 60 days from receipt of all requested information.

• Chapter 541: Unfair Methods of Competition and Unfair or Deceptive Acts or Practices. Allows recovery of actual damages, up to treble damages for knowing violations, plus costs and attorney’s fees.

• Chapter 542A: Weather-Related Claims (2017 Hail-Storm Bill). Although aimed at hail and wind, it also governs other “forces of nature,” such as heavy rains that lead to mold, and contains pre-suit notice requirements.

Statutory interest accrues at 18% per year for payment delays — a powerful incentive for insurers to comply.

2. Prompt Payment Deadlines in Detail

• 15 days to acknowledge receipt of the claim and request any additional information.

• 15 business days after receiving requested information to approve or deny the claim.

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

Failure at any step can trigger statutory interest and legal fees.

3. Bad Faith Standards in Texas

Texas follows the “reasonable basis” test established in Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987), and clarified in Universe Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997). An insurer acts in bad faith when it has no reasonable basis to deny or delay payment, or fails to conduct a proper investigation. Bad faith findings can open the door to exemplary damages.

Common Property Insurance Disputes in Texas

Mold Damage Claims

Mold is often excluded or limited in older policies, but many Texas policies now cover mold if it results from a covered peril such as a sudden pipe burst, roof leak after a storm, or plumbing overflow. Key disputes include:

• Causation arguments. Insurers frequently label mold as “long-term” or “maintenance-related” to deny coverage.

• Scope of remediation. Proper mold remediation requires containment, negative air pressure, and post-remediation clearance tests. Insurers may offer only cosmetic fixes.

• Cost of temporary housing. Extensive mold remediation may require you to vacate the home. Disputes arise over Additional Living Expenses (ALE).

Other Frequent Texas Disputes

• Wind and hail damage — especially to roofs and stucco after spring storms.

• Water damage — slab leaks, appliance failures, or storm-driven rain.

• Hurricane or tropical storm losses — while San Antonio sits inland, remnants of Gulf storms can still dump double-digit inches of rain.

• Fire and smoke — from kitchen fires or lightning strikes.

• Disputes over repair scope or pricing — “matching” materials, code upgrades, and contractor overhead & profit.

Texas Legal Protections & Regulations

Statutory Deadlines Recap

• Notice of Claim: As soon as practicable (but must file suit within two years from the date the cause of action accrues, per most policies and Chapter 16.003 of the Texas Civil Practice & Remedies Code).

• Appraisal Demand: No statutory deadline, but courts enforce “reasonable time” and policy deadlines (often 90 days post-denial).

• Statute of Limitations: Two years and one day under Chapter 541, or up to four years under contracts unless the policy shortens it (many carriers insert a two-year limit).

The Appraisal Process

Most Texas property policies include an appraisal clause to resolve disputes on amount of loss. Either party can invoke appraisal, selecting disinterested appraisers who pick an umpire if they cannot agree. The resulting award is binding on value but not on coverage. Recent Texas Supreme Court cases like State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), reaffirm that appraisal is favored but does not foreclose bad-faith claims.

Penalties for Bad Faith

If your insurer unreasonably delays or denies your mold claim, you may recover:

• 18% annual interest on the amount owed (Chapter 542).

• Attorney’s fees and court costs.

• Treble damages for knowing violations (Chapter 541).

• Exemplary damages if the conduct was malicious or fraudulent.

Recent Court Rulings Affecting Mold Claims

• Menchaca v. USAA Texas Lloyds, 545 S.W.3d 479 (Tex. 2018) clarified the interplay between contract and extra-contractual damages, allowing policyholders to recover for bad faith without first proving breach if they show independent injury.

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) ruled that an appraisal payment does not bar a prompt-payment claim.

• Hinojos v. State Farm Lloyds, 619 S.W.3d 651 (Tex. 2021) extended Barbara, holding that prompt-payment liability can attach even when an insurer meets appraisal deadlines but missed earlier statutory deadlines.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

Use your smartphone to photograph visible mold, water stains, and damaged belongings. Keep a written log of conversations with claim adjusters, including dates and summaries. Save every email and letter.

2. Mitigate Further Damage

Texas policies require you to mitigate losses. Hire a certified mold remediation company to perform an initial assessment and produce a Mold Remediation Protocol. Provide a copy to the insurer but retain control over the remediation timeline.

3. Secure Independent Estimates

Get at least two itemized bids from licensed contractors who specialize in mold remediation and water damage restoration. Ask for IICRC or Texas Department of Licensing and Regulation (TDLR) credentials.

4. Review Your Policy Coverage

Look for mold sub-limits, exclusions, and conditions precedent. Most Texas HO-B or HO-3 policies cover mold caused by a sudden and accidental discharge of water, but require you to report within 14 days of discovery. Endorsements may extend or limit coverage.

5. Invoke Appraisal (If Appropriate)

If the insurer’s estimate is unreasonably low, send a written demand for appraisal pursuant to your policy. Name a qualified appraiser and request the insurer to do the same within 20 days. Keep all correspondence in certified mail or email with read receipt.

6. File a Complaint with Regulators

If deadlines lapse or communications break down, submit a complaint to the Texas Department of Insurance (TDI). TDI will contact the insurer and require a written response, often expediting stalled claims.

7. Maintain a Claim Diary for Damages

Track out-of-pocket costs like hotel stays, air scrubber rentals, dehumidifiers, and medical expenses from mold exposure. These may be recoverable as Additional Living Expenses or consequential damages.

When to Seek Legal Help in Texas

Red Flags Requiring an Experienced Insurance Attorney

• Claim denial based on alleged “pre-existing” or “maintenance” mold.

• Payment delays exceeding 60 days, or repetitive requests for duplicative documents.

• Lowball offers that do not cover full remediation or living expenses.

• Pressure to sign a broad release before the full cost of repairs is known.

An attorney can issue a formal demand letter citing Chapters 541, 542, and 542A, negotiate in appraisal or mediation, and, if needed, file suit in Bexar County District Court. Texas lawyers must be licensed by the State Bar of Texas and carry professional liability coverage for mold-related cases.

How Louis Law Group Helps San Antonio Homeowners

• Free policy review and coverage analysis.

• Comprehensive claim valuation with certified mold experts.

• Aggressive enforcement of prompt-payment penalties.

• No fee unless we recover additional funds for you.

Our attorneys have recovered millions for Texas homeowners and are familiar with local building codes and climatic issues unique to San Antonio.

Local Resources & Next Steps

Government and Non-Profit Agencies

Texas Department of Insurance — File complaints and access consumer guides. Texas Prompt Payment of Claims Act — Full statutory text. Texas Court System — Dockets, forms, and self-help resources. San Antonio Bar Association — Lawyer referral & pro bono clinics. San Antonio Municipal Court — Local filing information.

Next Steps

• Gather all correspondence, estimates, and photographs.

• Mark statutory deadlines on your calendar (acknowledgment, evidence requests, payment).

• Consider a free consultation with a knowledgeable insurance attorney.

Legal Disclaimer: This article is for informational purposes only and does not constitute legal advice. Reading or relying on this material does not create an attorney-client relationship. Every claim is unique; consult qualified counsel about your specific circumstances.

Attorney Advertisement: Louis Law Group, PLLC, offices in Texas and Florida.

Ready to Protect Your Rights?

If your property insurance claim has been delayed, underpaid, or denied, call Louis Law Group today at 833-657-4812 for a free case evaluation and policy review. Our dedicated Texas team stands ready to fight for full compensation so you can restore your home and peace of mind.