Texas Property Insurance Law Guide – Houston Mold Damage Claims

13 min read

Introduction: Why Houston Homeowners Need to Know Their Rights

Houston’s subtropical climate and frequent severe weather events make mold growth a persistent threat for homeowners. After a tropical storm, flash flood, or plumbing leak, hidden moisture can rapidly turn into widespread mold damage—often leading to costly remediation bills, health concerns, and heated insurance disputes. Understanding Texas property insurance law in Houston is critical because insurers sometimes delay, underpay, or outright deny mold-related claims. Policyholders who know their statutory rights and obligations are far better positioned to secure full, timely payment and avoid financial distress.

In recent years, Louis Law Group has seen a dramatic uptick in calls from Houston residents who filed legitimate mold damage claims yet encountered resistance from carriers. Common complaints include:

• Prolonged claim investigations that exceed statutory deadlines;

• Lowball estimates that ignore mold remediation protocols under the Texas Mold Assessment and Remediation Rules (TMARR);

• Coverage denials based on supposed “maintenance issues” or wear and tear exclusions;

• Insurers alleging that mold is a result of pre-existing conditions even when recent hurricanes or burst pipes clearly triggered the loss.

The good news is that Texas law provides several layers of protection—including prompt payment statutes, bad-faith remedies, and an appraisal process—to level the playing field. This comprehensive guide explains those safeguards and outlines practical steps Houston homeowners can take after a dispute arises.

Understanding Texas Property Insurance Law

Key Statutes in the Texas Insurance Code

The primary statutory framework governing residential property insurance claims in Texas is the Texas Insurance Code Chapter 542 (Prompt Payment of Claims Act). Under Chapter 542:

• Insurers must acknowledge, investigate, and request necessary documents within 15 calendar days of receiving a written notice of loss.

• A coverage decision (acceptance or denial) must be made within 15 business days after the insurer receives all required items, statements, and forms. This can be extended to 30 days under certain circumstances, such as a catastrophe declaration.

• Once liability is accepted, the carrier must pay the claim within five business days.

• Violations can trigger 18% annual interest on the unpaid amount plus reasonable attorney’s fees.

Chapter 541 (Unfair Methods of Competition and Unfair or Deceptive Acts or Practices) also allows policyholders to sue for bad faith if an insurer fails to conduct a reasonable investigation, misrepresents policy coverage, or refuses to pay without a reasonable basis. Successful plaintiffs may recover actual damages, treble damages for knowing violations, court costs, and attorney’s fees.

Prompt Payment and Mold-Specific Regulations

Texas once imposed strict sub-limits on mold damage coverage, but major reforms in 2003 restored broader protections. Many standard homeowners’ policies issued in Houston now include limited mold remediation coverage (often $5,000–$10,000) unless policyholders purchased an endorsement for higher limits. Whether the mold arose from a covered peril—for example, a broken pipe or wind-driven rain—often determines coverage.

Texas also regulates mold remediation under the Texas Mold Assessment and Remediation Rules (TMARR) administered by the Texas Department of Licensing & Regulation (TDLR). Licensed mold remediators must follow specific containment and clearance testing protocols. Insurers who ignore these statutory requirements and offer to pay for cheaper, non-compliant cleanup may be violating both TMARR and the Insurance Code.

Bad Faith Protections for Policyholders

Texas jurisprudence imposes an implied covenant of good faith and fair dealing on insurers. Notable cases include Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987) and Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994), which recognized extra-contractual damages for bad-faith conduct. In mold disputes, bad faith can arise if the carrier refuses to pay for mandated air-quality tests or insists the homeowner remove mold without professional containment, risking additional property damage and health hazards.

Common Property Insurance Disputes in Texas

Louis Law Group regularly litigates the following dispute types on behalf of Houston homeowners:

Mold Damage after Water Intrusion

Because the Gulf Coast’s humidity accelerates mold growth, even minor water intrusions can spawn colonies behind drywall within 24–48 hours. Insurers sometimes argue the homeowner failed to mitigate, ignoring how rapidly conditions escalate. A timely claim coupled with professional moisture mapping can rebut such arguments.

Wind/Hail and Hurricane Claims

Storms like Hurricane Harvey (2017) and Tropical Storm Imelda (2019) caused billions in property damage. Disputes often center on roof repairs, interior water stains, and subsequent mold contamination. Carriers may blame “wear and tear,” forcing policyholders into appraisal or litigation to prove storm causation.

Plumbing Failures and Slab Leaks

Houston’s aging water lines and clay soil shift during extreme droughts and floods, leading to burst pipes and hidden leaks. Homeowners frequently battle over access and tear-out costs—the expense of tearing out walls and flooring to reach the broken pipe—along with mold remediation expenses once the leak is repaired.

Fire Losses and Smoke Residue

Even small kitchen fires can create widespread smoke odor requiring professional remediation. Insurers may undervalue restoration costs or decline to pay for ozone treatments, leaving lingering odors and potential mold growth from firefighting water.

Scope of Repair and Pricing Disputes

Insurers often rely on standardized estimating software that underestimates local labor and material costs. Disagreement over the proper scope (e.g., replacing a full wall vs. spot repair) and code upgrades (like mold-resistant drywall) sends many Houston homeowners to appraisal or court.

Texas Legal Protections & Regulations

Statutory Deadlines and Limitations

• Two-Year Statute of Limitations: Most first-party breach-of-contract and bad-faith suits under the Texas Insurance Code must be filed within two years from the date the cause of action accrues (Tex. Ins. Code § 541.162). Courts often measure from the date of claim denial or final payment.

• Notice of Claim: Some policies require notice of loss within 30 days. Failure to give prompt notice can jeopardize coverage, so report mold-related water events immediately.

• Appraisal Demand: Policies typically require written demand for appraisal within a “reasonable” time after disagreement—often interpreted as 30–60 days after impasse. Missing this window can waive your right to appraisal.

The Appraisal Process

• Either party may demand appraisal when they disagree on amount of loss.

• Each side selects a competent, disinterested appraiser.

• The two appraisers choose an umpire. If they cannot agree, a court may appoint one.

• A decision signed by any two of the three is binding on amount of loss but not on coverage.

Appraisal is generally faster and cheaper than litigation, but insurers may exploit the process by delaying payment of the appraisal award. Under Chapter 542, carriers still owe prompt payment interest if they wait more than five business days after accepting liability for the award.

Penalties for Bad Faith

In addition to 18% interest under Chapter 542, policyholders may recover treble damages under Chapter 541 if the insurer’s misconduct was committed “knowingly.” Courts have upheld punitive damages against carriers who deliberately ignored moisture readings or doctored expert reports to minimize mold payouts.

Recent Court Rulings Affecting Mold Claims

In Menchaca v. USAA Texas Lloyds Co., 545 S.W.3d 479 (Tex. 2018), the Texas Supreme Court clarified when an insured can recover independent injury damages for bad faith—even if policy benefits are not owed. While Menchaca did not involve mold specifically, its principles apply: a wrongful claim denial can cause independent harm, such as toxic mold exposure, supporting extra-contractual damages.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

Take high-resolution photos and videos of mold colonies, water lines, and damaged personal property. Keep a written log of contact with your insurer, including dates, times, and names of adjusters.

2. Mitigate Further Damage

Texas policies require reasonable mitigation. Engage an emergency water-extraction company within 24 hours if possible. Retain invoices to prove diligence.

3. Obtain Independent Estimates

Secure at least two licensed mold remediation bids compliant with TMARR. Independent estimates provide concrete evidence to counter lowball insurer offers.

4. Request the Certified Policy Copy

Under Tex. Ins. Code § 541.060(a)(4), failing to provide a copy of the policy may constitute an unfair practice. Always request a full, certified copy—endorsements included.

5. Escalate with a Detailed Demand Letter

If the insurer fails to resolve the dispute, Texas law requires a 60-day pre-suit notice letter. The letter must state the specific violations, damages, and attorney’s fees sought. Louis Law Group routinely drafts such notices to compel fair settlements.

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

The TDI Consumer Protection division investigates unfair claim practices. You can file online via the TDI complaint portal. Although TDI cannot force payment, a pending investigation often motivates insurers to negotiate.

7. Preserve Evidence for Litigation

Store mold samples, moisture-meter readings, and expert reports securely. Courts require reliable, admissible evidence, particularly in mold cases where spores can be removed during cleanup.

When to Seek Legal Help in Texas

While some claims resolve amicably, many Houston homeowners encounter roadblocks requiring professional intervention. Consider hiring a Houston insurance attorney when:

• The insurer delays beyond statutory deadlines, citing “ongoing investigation.”

• Coverage is denied based on exclusions you believe do not apply.

• The carrier ignores or refuses appraisal requests.

• Your home is uninhabitable due to mold, but additional living expenses (ALE) payments have stopped.

• You receive a large underpayment that does not cover mold remediation under TMARR standards.

Louis Law Group’s Texas-licensed attorneys combine aggressive negotiation with courtroom prowess. We handle:

• Pre-suit demand letters and Chapter 542 interest calculations;

• Appraisal representation and umpire selection strategy;

• Bad faith litigation in Harris County courts and the U.S. Southern District of Texas;

• Coordination with industrial hygienists and mold experts to substantiate damages.

Importantly, we work on a contingency fee basis—meaning you pay nothing unless we recover funds. If the insurer acts in bad faith, the court can order the carrier to pay your attorney’s fees.

Local Resources & Next Steps

Texas Department of Insurance (TDI)

The TDI offers consumer guides on mold claims and a mediation program for certain disputes. Visit the Texas Department of Insurance website or call 800-252-3439.

Harris County Courts

If litigation becomes necessary, most homeowners’ suits are filed in the Harris County Civil Courts at Law (claims up to $250,000) or the Harris County District Courts. Case filings and docket searches are available via the Harris County District Clerk.

Houston Bar Association & Legal Aid

For low-income homeowners, the Houston Bar Association offers free legal clinics. Lone Star Legal Aid also assists qualifying residents in mold-related housing matters.

Statutory Compliance Checklist

• Report loss immediately (ideally within 30 days).

• Carrier must acknowledge claim within 15 days.

• Carrier must accept/deny within 15 business days of receiving all documentation.

• Payment due within five business days of acceptance.

• Two-year deadline to file suit from denial/payment.

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. Our attorneys are licensed in Texas and have recovered millions for policyholders statewide. Let us enforce the law while you focus on restoring your home and health.

Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Consult a licensed Texas attorney regarding your specific circumstances. Past results do not guarantee future outcomes.