Texas Property Insurance & Mold Damage Guide – Houston

Estimated reading time: 13 min read

Introduction: Why Houston Homeowners Need to Know Their Rights

Houston’s subtropical climate, frequent heavy rains, and close proximity to the Gulf of Mexico create ideal conditions for hurricane-force winds, storm surges, flash floods, and—too often—mold that creeps in after water damage. These realities make property insurance essential for every Houston homeowner, yet thousands of policyholders find themselves battling insurers over delayed, underpaid, or outright denied claims. Even when premiums are paid faithfully, carriers sometimes dispute the cause of loss, minimize repair estimates, or blame homeowners for pre-existing conditions.

This comprehensive guide focuses on Texas property insurance law in Houston, with a special emphasis on mold damage—a perennial concern in the Bayou City. Our goal is to empower you with accurate, Texas-specific legal knowledge, show you how to document your loss, and explain when to invoke the powerful consumer protections baked into the Texas Insurance Code. If your insurer drags its feet or lowballs your payout, you have statutory rights and strategic options to push back.

Below, we walk through the statutes, deadlines, and practical steps every Houston homeowner should follow. Should your claim stall, remember you are not alone: Louis Law Group helps policyholders across Texas hold carriers accountable. If your claim has been delayed, underpaid, or denied, call 833-657-4812 today for a free case evaluation.

Understanding Texas Property Insurance Law

The Texas Insurance Code: Key Chapters for Policyholders

Texas legislators have armed homeowners with robust consumer protections that apply statewide, including Houston. The most frequently invoked sections include:

• Chapter 541 – Unfair Methods of Competition & Unfair Settlement Practices: Prohibits insurers from misrepresenting policy provisions, failing to promptly settle claims when liability is clear, and compelling lawsuits by offering substantially less than amounts ultimately recovered.

• Chapter 542 – The Prompt Payment of Claims Act: Forces insurers to acknowledge, investigate, and pay claims within strict deadlines (usually 15, 15, and 60 days respectively). If they miss these deadlines without justification, they owe 18% annual interest on the overdue amount plus attorney’s fees.

• Chapter 542A – Severe Weather Claims: Requires pre-suit notice and offers a mechanism for apportioning liability to adjusters. However, it does not strip homeowners of the right to sue for bad faith.

• Chapter 4102 – Public Insurance Adjusters: Grants licensed public adjusters authority to assist policyholders in preparing, filing, and negotiating claims.

Full statutory text is available from the Texas Insurance Code online portal.

Prompt Payment Deadlines in Plain English

• Day 0 – Notice of Loss: You tell your insurer or agent about the damage.

• Within 15 calendar days: The insurer must acknowledge receipt of the claim, begin its investigation, and request any additional information it reasonably needs.

• Within 15 days after receiving your documents: The carrier must accept or reject the claim in whole or in part (an extension to 45 days is allowed if they provide written notice with reasons).

• Payment: Once accepted, payment must issue within 5 business days (or 10 if the claim is part of a surplus lines policy).

Failure to comply triggers the 18% penalty interest under Tex. Ins. Code §542.060, plus attorney’s fees and court costs if you sue and win.

Bad Faith in Texas

Even if your policy does not require payment, Texas recognizes a common-law duty of good faith and fair dealing. Under the landmark case Arnold v. Nat’l County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987), insurers can be liable for tort damages (including mental anguish and punitive damages) if they deny a claim without a reasonable basis or fail to conduct a proper investigation.

Common Property Insurance Disputes in Texas

• Wind and Hail: Spring thunderstorms and hurricanes routinely batter roofs, siding, and windows. Insurers may allege pre-existing wear or inadequate maintenance to cut payouts.

• Water Damage & Mold: Houston’s high humidity accelerates mold growth after leaks, pipe bursts, or flooding. Insurers often limit mold coverage or require proof the mold resulted from a covered peril, leading to disputes over scope and remediation costs.

• Hurricane & Tropical Storm Claims: Deductibles for named storms can be 2-5% of the dwelling limit, making underpayments painful. Insurers may dispute wind v. flood causation.

• Fire & Smoke Damage: Electrical fires, lightning strikes, and kitchen accidents trigger restoration and smoke remediation disagreements.

• Foundation & Structural Movement: Houston’s expansive clay soils crack slabs and walls. Carriers may call it ‘settling’ not covered by policy.

Each of these scenarios carries unique documentation challenges, but mold is among the trickiest. Texas homeowners must act quickly because mold colonies can expand within 24-48 hours and some policies impose 14-day notice deadlines after discovery of water intrusion.

Texas Legal Protections & Regulations

Statutes of Limitation

• Breach of Contract: Four (4) years from the date of breach (Tex. Civ. Prac. & Rem. Code §16.004).

• Texas Insurance Code §541 claims: Two (2) years from the date the unfair act occurred or should have been discovered; extended to three (3) years with written notice to the insurer within the first two years.

• Prompt Payment §542 claims: Two (2) years.

Because limitations can be tolled by negotiations or partial payments, consult counsel early to protect your filing window.

Appraisal Clause Mechanics

Most Texas homeowner policies contain an appraisal clause allowing either side to demand a binding valuation of the loss. Deadlines are generally 20–30 days after the demand is received, although exact timelines vary by policy. Key points:

• Invoke in Writing: Send a dated letter by certified mail demanding appraisal under the policy’s clause.

• Select a Competent Appraiser: Each side chooses an appraiser; the two appraisers select a neutral umpire.

• Scope vs. Coverage: Appraisal addresses amount of loss, not whether the loss is covered. If the insurer disputes coverage, you may need both appraisal and litigation.

• Payment Deadline: Once an appraisal award is signed by two of the three panel members, the insurer must pay promptly under §542 deadlines.

Recent Court Rulings Influencing Homeowners

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) – clarified that appraisal awards, absent evidence of fraud, bar breach-of-contract and bad-faith claims only to the extent the insurer timely pays the award.

• Barbara Technologies v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) – held that prompt payment penalties may still apply even when the insurer pays an appraisal award.

• Hinojos v. State Farm Lloyds, 619 S.W.3d 651 (Tex. 2021) – reaffirmed that an insured may recover attorney’s fees and interest under §542 if the carrier pays late, despite paying appraisal.

These decisions underscore the leverage homeowners retain even after appraisal.

Steps to Take After a Property Insurance Dispute

1. Document Everything Immediately

• Photograph and video all damaged areas, including mold growth, water stains, and items affected.

• Retain receipts for emergency mitigation: fans, dehumidifiers, tarps, or temporary housing.

• Log every phone call, email, or text with your carrier or adjuster—note dates, times, and promises made.

2. Mitigate & Prevent Further Damage

Texas policies obligate you to prevent additional damage. For mold, this means drying the structure within 24–48 hours using dehumidifiers or professional remediation. Failure to mitigate can become a coverage defense.

3. Secure Independent Estimates

Obtain at least two written bids from licensed contractors and a certified mold remediation company. Detailed scopes help rebut low insurer estimates.

4. Review Your Declarations Page & Endorsements

Look for mold sub-limits, water exclusions, or endorsements that might add coverage. Understanding these provisions is critical during negotiations.

5. File a Formal Complaint if Deadlines Are Missed

If the insurer blows past prompt payment timelines, file a written complaint with the Texas Department of Insurance (TDI). Attach your claim correspondence, photos, and policy number. TDI inquiries frequently shake loose stalled payments.

6. Preserve Evidence for Litigation

Keep damaged materials until the insurer inspects or signs a spoliation agreement. Courts may dismiss claims if homeowners destroy crucial evidence.

7. Consider a Public Adjuster

Licensed under Tex. Ins. Code §4102, public adjusters negotiate on your behalf for a fee typically capped at 10% of the recovery. Choose an adjuster experienced with Houston-area mold claims.

When to Seek Legal Help in Texas

While many claims resolve through normal adjustment, several red flags warrant immediate counsel from a Houston insurance attorney:

• The insurer denies coverage without providing a clear policy citation.

• Payment is less than half of multiple independent estimates.

• You receive a ‘reservation of rights’ letter suggesting possible policy defenses.

• The carrier alleges late notice or failure to mitigate, threatening to bar the claim.

• An appraisal demand is issued and you’re unsure how to proceed.

Texas attorneys handling first-party property cases must be licensed by the State Bar of Texas and, for court appearances, admitted to the relevant county or federal courts. Louis Law Group’s attorneys are fully licensed in Texas and focus on property insurance litigation. We front all costs and only get paid when you recover.

Time is critical. Most Insurance Code causes of action expire in two years, and vital evidence can evaporate sooner. A lawyer can send statutory demand letters, engage qualified experts, and, if necessary, file suit in Harris County District Court or federal court.

Local Resources & Next Steps

Texas Department of Insurance – Complaint portal, consumer guides, and agent lookup. Harris County District Courts – Docket search and filing information for lawsuits filed in Houston. Houston Bar Association – Monthly LegalLine program for free 15-minute consultations. Texas RioGrande Legal Aid – Income-qualified legal assistance, including disaster-related claims.

Your Next Move

If you believe your Houston property insurance claim—whether for mold, wind, or water damage—has been mishandled, do not let the carrier dictate the result. Gather your documents, mark your calendars with statutory deadlines, and reach out for professional help before evidence disappears or limitations run.

Call Louis Law Group at 833-657-4812 for a free case evaluation and comprehensive policy review. We serve homeowners throughout Houston and greater Harris County, fighting to secure the full benefits you paid for and deserve.

Disclaimer

This guide is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship with Louis Law Group. Because every claim is unique, you should consult a qualified attorney about your specific circumstances before taking legal action.