Texas Property Insurance Law Guide for Houston Homeowners

Estimated reading time: 13 min read

Introduction: Why Houston Homeowners Must Understand Texas Property Insurance Law

From tropical storms blowing in off the Gulf, to year-round humidity that accelerates mold growth, Houston homeowners experience some of the most challenging property insurance claims in Texas. When an insurer delays, underpays, or flat-out denies a claim, you need more than policy language—you need to know your legal rights under Texas law. This comprehensive guide explains the statutes, deadlines, and dispute-resolution options that apply specifically to residential property insurance claims in Houston, Texas, with a slight but unapologetic bias toward protecting policyholders. If you are wrestling with wind, hail, water, fire, or mold damage—and your insurer is not treating you fairly—this article is for you.

Legal Disclaimer: This guide provides general information about Texas property insurance law. It is not legal advice and does not create an attorney-client relationship. For advice about your specific claim, speak with a licensed Texas attorney.

Understanding Texas Property Insurance Law

The Texas Insurance Code Provisions That Matter Most

Texas has enacted some of the nation’s strongest consumer protections for policyholders. The following chapters of the Texas Insurance Code are at the heart of most residential property insurance disputes:

• Chapter 541 – Unfair Methods of Competition and Unfair or Deceptive Acts or Practices: Enables policyholders to sue for bad faith, recover actual damages, and potentially obtain up to three times those damages if the insurer acted “knowingly.”

• Chapter 542 – Prompt Payment of Claims: Known as the Prompt Payment Act, this chapter imposes strict deadlines on insurers, including 15 calendar days to acknowledge a claim and 15 business days after receiving necessary documentation to accept or deny it. Failure to comply allows homeowners to recover interest (currently 18% per year) and attorney’s fees.

• Chapter 542A – Severe Weather Events: Requires pre-suit notice and includes provisions that impact attorney’s fees in lawsuits arising from storms such as Hurricane Harvey.

Statute of Limitations You Must Know

• Bad faith (Chapter 541): Two years from the date the unfair practice occurred or was discovered (no later than two years and one day after).

• Breach of contract: Four years under Tex. Civ. Prac. & Rem. Code §16.004, though many policies attempt to shorten the period to two years. Courts will enforce a reasonable contractual limitation, so mark your calendar as soon as a dispute arises.

Texas Prompt Payment Deadlines

• Within 15 calendar days of receiving written notice of loss, the insurer must acknowledge the claim, begin an investigation, and request all information it needs.

• Insurer has 15 business days after it receives all requested information to accept or reject the claim in writing.

• After agreeing to pay, the carrier must issue payment within five business days. Violations trigger statutory interest and attorney’s fees.

Common Property Insurance Disputes in Texas

1. Wind and Hail Damage

Harris County ranks among the top Texas counties for severe thunderstorm warnings. Roof, siding, and window damage often turn into scope-of-repair fights.

2. Water and Mold Damage (Houston’s Persistent Challenge)

Houston’s subtropical climate—combined with aging plumbing—makes interior water losses routine. Mold contamination can develop within 48 hours, yet insurers sometimes deny mold remediation costs, citing exclusions or caps. Understanding endorsements and Texas mold regulations is critical.

3. Hurricane and Tropical Storm Claims

After Hurricanes Ike (2008) and Harvey (2017), thousands of local homeowners confronted underpayment and delays. Chapter 542A now governs some storm disputes but also imposes notice requirements on homeowners.

4. Fire and Smoke Losses

Although less frequent than wind or water claims, fire losses generate complex valuation questions—replacement cost versus actual cash value—and disputes over code-upgrade coverage.

5. Appraisal Scope Conflicts

Texas courts have repeatedly ruled that appraisal addresses amount of loss, not coverage. Yet carriers sometimes compel appraisal prematurely or refuse to participate, forcing litigation.

Texas Legal Protections & Regulations

Statutory Deadlines at a Glance

ActionDeadlineStatute/Authority Insurer acknowledges claim15 calendar daysTex. Ins. Code §542.055 Insurer accepts/denies claim15 business days after all docs§542.056 Payment issued5 business days§542.057 Appraisal demand (typical policy)Within 60 days of request — policy governsPolicy language File suit for bad faith2 yrs (plus 1 day)§541.162

Appraisal Clause: A Double-Edged Sword

Most Texas homeowners’ policies require appraisal when the parties disagree on price. Key points:

• Each side selects an independent appraiser within the timeframe set in the policy (often 20 days). If they cannot agree on an umpire, either may petition a court to appoint one.

• Appraisal awards are binding as to amount but not coverage. You may still litigate if the insurer claims your mold loss is excluded.

• You generally pay your appraiser; the umpire’s fee is split.

Bad Faith Penalties

If an insurer unreasonably delays or denies payment, Chapter 541 allows recovery of mental anguish, treble damages, and attorney’s fees. Courts look for evidence of:

• Failure to conduct a reasonable investigation.

• Misrepresentation of policy terms.

• Refusal to pay without a reasonable basis.

Recent Texas Court Precedents

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019): Confirmed that appraisal awards can limit but not eliminate bad-faith claims if extra-contractual damages exist beyond the award.

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019): Held that payment of an appraisal award does not, by itself, bar Chapter 542 prompt-payment claims.

Steps to Take After a Property Insurance Dispute

1. Secure the Property and Document Everything

• Take dated photos and videos of all damage, including hidden areas where mold may grow.

• Preserve damaged materials for inspection by the insurer or your expert.

• Keep copies of all correspondence, including emails and text messages with adjusters.

2. Obtain Independent Estimates

Hire a reputable Houston contractor or public adjuster experienced in Texas property damage claims. A detailed Xactimate estimate provides leverage during negotiations.

3. Review Your Policy Endorsements

Look for mold remediation sub-limits (often $5,000–$10,000) and any optional endorsements that may increase limits. If the insurer failed to offer higher mold limits at sale or renewal, there may be grounds for additional claims.

4. Demand Appraisal (If Appropriate)

• Send a written demand citing the policy’s appraisal clause.

• Nominate your appraiser and request the insurer’s selection within the policy timeframe.

• Be aware that some disputes—like whether plumbing leaks are sudden and accidental—can’t be resolved in appraisal and may require litigation.

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

If you suspect unfair treatment, file an online complaint through the TDI Consumer Help Page. TDI contacts the insurer within 15 days, and although it cannot force payment, the record helps in future litigation.

6. Track Statutory Deadlines

Set calendar reminders for every statutory deadline—15-day acknowledgments, 15-business-day decisions, 5-day payments, and suit limitations. Courts strictly enforce them.

7. Keep Communication in Writing

Texas courts permit recording phone calls with one-party consent, but written email or certified mail correspondence prevents later disputes about who said what.

When to Seek Legal Help in Texas

Warning Signs You Need a Houston Insurance Attorney

• Your insurer cites broad policy exclusions without explaining how they apply.

• Delays exceed prompt payment deadlines.

• You receive a lowball estimate that does not cover code upgrades or mold remediation.

• The adjuster pressures you to sign a release in exchange for partial payment.

How Louis Law Group Protects Texas Homeowners

Louis Law Group’s attorneys are licensed in Texas and focus exclusively on property insurance disputes. We:

• Conduct independent damage inspections and policy reviews.

• Issue Chapter 542A pre-suit notices to preserve attorney’s fees.

• File breach of contract and bad-faith lawsuits in Harris County courts when necessary.

• Work on contingency—no fee 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

Texas Department of Insurance (TDI) – Complaint portal, consumer guides, and licensing lookup. Harris County District Clerk – File or track lawsuits in Houston. State Bar of Texas – Verify attorney licenses and find legal aid services. Houston Bar Association – Pro bono legal programs for qualifying homeowners.

Houston’s extreme weather will not change, but your insurer’s decision can. Armed with the statutes, deadlines, and strategies outlined in this guide, you are better positioned to secure every dollar your policy promises. To level the playing field, contact Louis Law Group at 833-657-4812 for a free consultation.