Dallas Guide to Texas Property Insurance Law & Mold Claims

Estimated reading time: 12 min read

Introduction: Why Dallas Homeowners Need to Master Texas Property Insurance Law

For Dallas homeowners, mild winters, scorching summers, and sudden spring thunderstorms create a perfect recipe for roof leaks, burst pipes, and ultimately mold growth inside walls and attics. When water damage morphs into toxic mold, repairs can spiral into five-figure bills—yet insurers frequently delay, underpay, or outright deny mold-related property insurance claims. Understanding Texas property insurance law and how it applies to mold damage in Dallas empowers policyholders to protect their investments, health, and peace of mind.

This comprehensive guide—written from the insured’s perspective—covers:

• Key provisions of the Texas Insurance Code that safeguard homeowners.

• Typical disputes over mold, water, hail, wind, fire, and hurricane claims.

• Statutory deadlines like the Prompt Payment of Claims Act.

• The appraisal process, statutes of limitation, and bad-faith penalties.

• Step-by-step actions to preserve evidence, challenge lowball offers, and escalate disputes.

• Local Dallas resources and when to involve a dallas insurance attorney.

Whether your claim is stalled or the insurer insists mold is “pre-existing,” the information below can tip the balance back in your favor. Legal disclaimer: This guide is for educational purposes only and does not create an attorney-client relationship. Always consult a licensed Texas attorney about your specific facts.

Understanding Texas Property Insurance Law

1. The Texas Insurance Code—Your First Line of Defense

Several chapters of the Texas Insurance Code directly protect policyholders:

• Chapter 542: Prompt Payment of Claims Act (PPCA)—Requires insurers to acknowledge a claim within 15 calendar days, accept or reject it within 15 business days after receiving all requested items, and pay within five business days of acceptance.

• Chapter 541: Unfair Methods of Competition & Unfair Practices—Creates a cause of action for "bad faith" when insurers misrepresent policy terms, fail to settle promptly, or deny claims without a reasonable investigation.

• Chapter 554: Mold-Related Property Coverage—Allows insurers to limit mold remediation coverage but mandates specific disclosures and endorsements.

Violations of Chapters 541 or 542 can entitle Dallas homeowners to additional damages, statutory interest (10% per annum under PPCA), court costs, and attorney’s fees.

2. Statutes of Limitation & Notice Requirements

• Bad-Faith & Deceptive Practices (Ch. 541): Two years and one day from the date the unfair act occurred or the date it was discovered (Tex. Ins. Code §541.162).

• Breach of Contract: Four years under Texas’s general civil limitations statute (Tex. Civ. Prac. & Rem. Code §16.004).

• Policies often impose a contractual deadline (“suit limitations clause”), sometimes as short as two years. Texas courts generally enforce these clauses if they are conspicuous and reasonable.

3. Recent Texas Supreme Court Cases Every Homeowner Should Know

• Barbara Technologies Corp. v. State Farm (2019): Payment of an appraisal award does not automatically absolve an insurer of PPCA liability.

• Ortiz v. State Farm Lloyds (2019): A policyholder may pursue bad-faith claims after appraisal only if the insurer’s liability was reasonably clear yet payment was withheld.

• Menchaca v. USAA (2018): Clarified circumstances under which an insured can recover extra-contractual damages even when contractual benefits are denied.

These decisions reinforce that insurers can be responsible for additional damages even after they eventually pay.

Common Property Insurance Disputes in Texas

1. Mold Damage

Mold claims usually follow water intrusion from roof leaks, burst pipes, or HVAC failures. Insurers often assert:

• The water damage was "gradual" or "long-term," triggering exclusions.

• Mold is capped (e.g., $5,000) by a policy endorsement.

• Pre-existing conditions or poor maintenance caused the mold.

Under Chapter 554, if an insurer offers a lower premium for limited mold coverage, it must provide a clear endorsement. Failure to do so can invalidate the cap.

2. Wind & Hail Claims

North Texas leads the nation in severe hail events. Disputes revolve around whether dents, spatter, or torn shingles constitute “direct physical loss.” Insurers may apply cosmetic damage exclusions or depreciate materials excessively.

3. Water & Plumbing Losses

Frozen pipes in February 2021’s Winter Storm Uri awakened homeowners to hidden policy exclusions for frozen plumbing if heat was not maintained. Prompt drying and mold remediation are critical to avoid secondary exclusions.

4. Fire & Smoke

Insurers often question the scope of smoke odor remediation. Texas courts tend to side with policyholders when the entire structure must be cleaned to return to pre-loss condition.

5. Hurricane & Tornado Losses

Although coastal hurricanes rarely reach Dallas with full force, tornadoes and derechos can be just as destructive. Disputes involve anti-concurrent causation clauses when wind is covered but flood is not.

Texas Legal Protections & Regulations

1. Prompt Payment Deadlines Broken Down

Notice Deadline—15 Days

• Insurer must acknowledge claim, request needed items, and assign an adjuster within 15 calendar days (Tex. Ins. Code §542.055).

Decision Deadline—15 Business Days

• After receiving all requested documents, insurer has 15 business days to accept or deny.

Payment Deadline—5 Business Days

• Payment must be issued within five business days of acceptance (sometimes extended to 20 business days after catastrophic events).

Missed deadlines trigger 10% annual statutory interest plus attorney’s fees.

2. The Appraisal Clause

Most Texas policies allow either party to invoke appraisal to resolve disputes over the amount of loss—not coverage disputes. Steps:

• Demand appraisal in writing, referencing the policy provision.

• Each side names a competent appraiser within 20 days (typical).

• Appraisers select an umpire; if they cannot agree within 15 days, one may petition a Dallas County court to appoint an umpire.

• Two of the three signatures on an award bind both parties.

Appraisal awards are binding on amount but not on liability. After Barbara Technologies, policyholders may still pursue PPCA interest.

3. Bad Faith & Extra-Contractual Damages

Under Chapter 541 and the common-law duty of good faith and fair dealing, insurers face liability when they:

• Misrepresent policy coverage.

• Fail to conduct a reasonable investigation.

• Deny or delay benefits when liability is reasonably clear.

Damages can include mental anguish, trebled economic damages if conduct was “knowing,” and attorney’s fees.

4. Departmental & Judicial Oversight

The Texas Department of Insurance (TDI) investigates consumer complaints and enforces administrative penalties. Policyholders may also seek judicial relief in state or federal court (diversity jurisdiction applies when the insurer is out-of-state and the amount in controversy exceeds $75,000).

Steps to Take After a Property Insurance Dispute

1. Secure the Scene & Mitigate Further Damage

Under most policies, you must prevent additional loss. For mold claims, that means:

• Stopping water intrusion immediately.

• Documenting humidity readings.

• Running dehumidifiers and air scrubbers.

2. Document Everything—Photos, Videos, and Logs

Take date-stamped photos of visible mold, water stains, and demolition. Keep a journal of every conversation with adjusters, including date, time, and substance.

3. Obtain Independent Estimates

Hire an IICRC-certified mold remediator and a licensed public adjuster or contractor to draft a competing Xactimate estimate. Compare it to the insurer’s scope.

4. Review Your Policy for Endorsements & Exclusions

Locate any mold limitation endorsements. If the insurer failed to provide a proper disclosure under Chapter 554, the limitation may be unenforceable.

5. File a Complaint with TDI if Deadlines Are Missed

If the insurer ignores the 15-day acknowledgment or 15-day decision deadlines, file an online complaint through TDI’s Consumer Portal. Attach your timeline and correspondence.

6. Preserve Your Legal Rights

• Send a 60-Day Notice Letter before filing a Chapter 541 or 542 lawsuit, detailing the specific violations and damages sought (Tex. Ins. Code §541.154; §542A.003).

• Calendar limitations periods (two years for bad faith, four years for breach).

• Keep receipts for all mitigation expenses; they are compensable if reasonable and necessary.

When to Seek Legal Help in Texas

Consider engaging an attorney when:

• The insurer invokes appraisal but still questions coverage.

• You receive a denial citing ambiguous exclusions.

• An adjuster pressures you to sign a broad release.

• Delays exceed the PPCA deadlines without explanation.

• The claim involves complex mold toxicity or health impacts.

Texas attorneys must be licensed by the Texas Supreme Court and remain in good standing. Verify a lawyer’s disciplinary history through the State Bar’s public records before hiring. How Louis Law Group Helps Dallas Homeowners

• Free policy review to spot hidden mold limitations.

• Independent damage inspections by trusted experts.

• Statutory notice letters and lawsuit filings in Dallas County or U.S. District Court for the Northern District of Texas.

• 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 – File a Complaint Dallas Bar Association Lawyer Referral Service Texas Judicial Branch – Court Locator HUD-Approved Housing Counselors in Texas

After you have gathered documentation, secured independent estimates, and filed necessary complaints, the final step is to decide whether to litigate or seek negotiated settlement. An experienced dallas insurance attorney can quantify statutory interest, penalty damages, and attorneys’ fees—often motivating insurers to pay full value.

Final Thoughts

Mold damage is more than an unsightly nuisance—it threatens indoor air quality and property values. Texas law gives Dallas homeowners potent tools to compel fair payment, but deadlines and procedural traps abound. Acting fast, documenting thoroughly, and leveraging both administrative and judicial remedies can make the difference between a healthy home and a financial nightmare.

Ready to level the playing field? Call Louis Law Group at 833-657-4812 today for a free policy review and strategy session. Our attorneys fight for Texas policyholders—and we only get paid if you do.