San Antonio Mold Damage Guide: Texas Property Insurance Law

Estimated read time: 12 min read

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

Frequent flash floods, sudden hailstorms, and scorching humidity make San Antonio, Texas particularly susceptible to hidden mold outbreaks after a loss. When that musty smell creeps in, drying out Sheetrock or replacing insulation is only half the battle—the bigger challenge is navigating a complex property insurance system that often favors carriers. Delayed inspections, partial payments, and outright claim denials are common complaints we hear from local homeowners. This guide equips policyholders with Texas-specific legal knowledge and practical steps to push back against unfair practices, especially when mold damage is at stake. From statutory deadlines in the Texas Insurance Code to recent Bexar County court decisions, every section is designed to empower you—the insured—to safeguard your rights, preserve evidence, and maximize recovery under your homeowner’s policy.

Understanding Texas Property Insurance Law

Key Statutes Protecting Policyholders

• Texas Insurance Code Chapter 542 – Prompt Payment of Claims Act: Insurers must acknowledge a claim within 15 calendar days (30 after a declared catastrophe), begin investigation, and request all necessary documents. Once they receive the information, they normally have 15 more days to accept or deny the claim and five business days after acceptance to pay. Violations can trigger 18% annual interest and attorney’s fees.

• Texas Insurance Code Chapter 541 – Unfair Settlement Practices: Prohibits misrepresenting policy terms, failing to adopt reasonable claim standards, and refusing prompt settlements when liability is clear. Policyholders may sue for actual damages, mental anguish, and up to treble damages for knowing violations.

• Chapter 2301, Texas Administrative Code: Requires mold coverage disclosures and governs how insurers handle mold claims, including limits on exclusionary endorsements.

• Statute of Limitations: Breach-of-contract actions are generally four years under Texas law, but policies often shorten the period—commonly to two years and one day from the date of loss or denial. Actions under Chapter 541 must be filed within two years from the violation or discovery.

Bad Faith and Remedies

If an insurer denies a mold claim without a reasonable investigation—perhaps citing “long-term leakage” when water intrusion was sudden—Texas courts recognize a separate common-law bad-faith cause of action. In USAA Texas Lloyds Co. v. Menchaca (2018), the Texas Supreme Court clarified that extra-contractual damages may be recovered when the insured shows an injury independent of policy benefits or a statutory violation that allows them.

Special Rules for Mold Claims

After the mold crisis of the early 2000s, Texas regulators allowed carriers to exclude or limit mold coverage unless the mold resulted from a covered peril such as a sudden water discharge. Examine your HO-B or HO-3 policy endorsements carefully; some provide only $5,000 or $10,000 sub-limits unless you buy mold remediation buy-back coverage.

Importantly, the Texas Department of Insurance (TDI) requires clear notice of any mold exclusion. If your policy lacks that disclosure, you may use it as leverage in negotiation or litigation.

Common Property Insurance Disputes Faced by Texas Homeowners

• Wind & Hail Damage – Frequent spring storms in San Antonio bruise shingles and loosen flashing, often letting water intrude and create perfect mold breeding grounds.

• Plumbing Leaks & Burst Pipes – High summer temps followed by sudden cold snaps can burst copper lines; mold starts within 24–48 hours.

• Flood vs. Surface Water Confusion – Home policies exclude rising floodwater, but insurers sometimes mislabel drain backups or broken irrigation lines as “flood.”

• Fire & Smoke Residue – Suppressing a blaze with water accelerates mold growth behind walls once the fire crews leave.

• Scope & Pricing Disputes – Carriers may approve drywall removal but refuse air scrubbers or HEPA filtration, undervaluing mold remediation costs.

Texas Legal Protections & Regulations

Prompt Payment Act Deadlines

StageNon-CatastropheDeclared Catastrophe Acknowledge, begin investigation, request information15 days30 days Accept or deny claim after receipt of documents15 days45 days Issue payment after acceptance5 business days15 business days

Failure triggers statutory interest and attorney’s fees—powerful leverage in settlement discussions.

Appraisal Clause Mechanics

Most Texas policies allow either party to demand appraisal when they disagree over the amount of loss. Once invoked, each side selects an appraiser within 20 days; the two appraisers then pick an umpire. A decision signed by any two of the three is binding unless tainted by fraud or bias. In 2020, the Fifth Circuit’s decision in State Farm Lloyds v. Johnson reiterated that appraisal awards generally preclude further litigation on valuation but not on coverage or bad faith—crucial if the carrier still disputes mold causation.

Notice Requirements Before Suit

Texas Insurance Code § 542A.003 demands written notice at least 60 days before filing a bad-faith lawsuit, detailing the amount owed and attorney’s fees. If skipped, courts will abate the case. Your attorney must also provide a settlement demand as part of that notice.

Penalties for Bad Faith

• 18% per annum interest on the amount wrongfully withheld.

• Reasonable and necessary attorney’s fees.

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

Step-by-Step Action Plan After a Property Insurance Dispute in San Antonio

1. Secure the Scene and Prevent Further Mold Growth

Under the “Duties After Loss” clause, you must mitigate damages. Hire a licensed remediator to install dehumidifiers and remove wet drywall within 48 hours. Keep invoices; insurers must reimburse reasonable mitigation costs even if they later deny the claim.

2. Document Everything

• Date-stamped photos/video of water source, mold colonies, and moisture readings.

• Written timeline: when you discovered damage, called the carrier, and met adjusters.

• All communications—texts, emails, carrier portal logs.

3. Obtain Independent Estimates

Carriers often rely on internal pricing software that undervalues mold remediation—no allowance for containment or third-party clearance testing. Get at least two Xactimate-based estimates from Texas-licensed mold remediation contractors. Compare scope line by line against the carrier’s summary.

4. Request a Certified Copy of the Policy

Texas law requires your insurer to provide the full policy upon request. Look for mold sub-limits, endorsements, and the appraisal clause wording.

5. File a Complaint with TDI if Deadlines Are Missed

If the adjuster ghosts you beyond statutory deadlines, file an online complaint with the Texas Department of Insurance Consumer Protection Division. Attach your claim diary and proof of delay; TDI inquiries often nudge carriers into compliance.

6. Consider Invoking Appraisal

When the only dispute is how much the mold remediation should cost, appraisal is faster than litigation. Send written demand citing the policy’s appraisal paragraph. Remember you must still comply with any notice-of-suit requirements if you intend to litigate bad faith later.

7. Preserve Legal Rights

Mark your calendar: two-year policy limitations, Chapter 541 deadlines, and the 60-day pre-suit notice. Missing one of these dates can bar recovery.

When to Seek Legal Help

Texas insurance carriers are sophisticated litigants with teams of lawyers. You should consider engaging counsel when:

• The carrier denies mold coverage, alleging “maintenance” or “long-term seepage.”

• Payments fall far short of independent estimates.

• You receive a “Reservation of Rights” letter citing complex exclusions.

• The carrier fails to meet Chapter 542 deadlines and you want statutory interest.

• You are served with subrogation or salvage demands tied to the loss.

Louis Law Group focuses on representing homeowners and business owners in property damage disputes across Texas. Our attorneys are licensed in all state courts, the U.S. District Court for the Western District of Texas, and regularly practice before the Bexar County civil district courts. We front the costs of experts, appraisers, and industrial hygienists, and we do not get paid unless you do.

Local Resources & Next Steps

Texas Department of Insurance – Consumer Help Line: 1-800-252-3439 Bexar County District Courts: File breach-of-contract or bad-faith lawsuits locally. San Antonio Bar Association Lawyer Referral Service: 210-227-1853 Texas Insurance Code: Full statutory text.

Finally, keep an eye on seasonal weather patterns that affect mold claims in our city. According to NOAA, the average relative humidity in San Antonio hovers around 70% year-round, and the region averages 32 inches of rain. Quick moisture control is vital.

Legal Disclaimer

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

Take Action Today

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. Protect your home, your health, and your financial future.