Houston Guide to Texas Property Insurance Law & Mold Rights

Estimated read time: 12 min read

Introduction: Why Houston Homeowners Need to Understand Texas Property Insurance Law

Houston’s humid subtropical climate, frequent tropical storms, and aging housing stock create the perfect breeding ground for water intrusion and mold growth. When a pipe bursts or a roof leak goes unnoticed during one of our famous Gulf downpours, homeowners often discover extensive mold damage that can threaten both property value and health. Add in risks such as hurricane-force winds, hail, and sudden freeze events like Winter Storm Uri in 2021, and it becomes clear why understanding Texas property insurance law in Houston is indispensable. Unfortunately, insurers do not always handle claims fairly. Delays, lowball settlement offers, and outright denials are common, especially with mold or water-related losses where carriers frequently cite policy exclusions or caps.

This guide—written from a homeowner-friendly perspective—explains your rights under state law, key deadlines insurers must follow, and practical steps you can take when a claim for mold damage or other property losses is mishandled. Whether you suspect bad faith, need to invoke the appraisal clause, or are considering legal action, the information below will help you protect your largest investment: your home.

Understanding Texas Property Insurance Law

Key Statutes Every Houston Policyholder Should Know

• Texas Insurance Code Chapter 542 – Prompt Payment of Claims Act (PPCA): Requires insurers to acknowledge, investigate, and pay or deny claims within strict timelines (discussed below).

• Texas Insurance Code Chapter 541 – Unfair Methods of Competition & Unfair or Deceptive Acts or Practices: Allows policyholders to sue for treble damages when insurers act in bad faith.

• Texas Deceptive Trade Practices-Consumer Protection Act (DTPA): Gives additional remedies—including up to three times economic damages plus attorney’s fees—if the insurer’s conduct is deceptive.

• Statutes of Limitation: Most breach-of-contract actions (e.g., failure to pay under the policy) must be filed within four years (Tex. Civ. Prac. & Rem. Code § 16.051), while actions under TIC § 541 must be brought within two years from when you knew or should have known of the violation (TIC § 541.162).

Prompt Payment Deadlines

• 15 days to acknowledge receipt of your claim (TIC § 542.055).

• 15 business days after receiving all requested items to accept or reject the claim (TIC § 542.056). The deadline can extend to 45 days with written notice.

• 5 business days to pay after the insurer agrees to pay (TIC § 542.057).

Failure to comply triggers automatic penalties: 18% annual interest plus reasonable attorney’s fees.

Bad Faith Explained

Texas recognizes a common-law duty of good faith and fair dealing. Insurers act in bad faith when they know or should know that liability is reasonably clear but still deny or delay payment (Arnold v. Nat’l County Mut. Fire Ins. Co., 1984). Under TIC § 541 and the DTPA, successful plaintiffs may recover treble damages, mental anguish, and court costs.

Common Property Insurance Disputes in Texas

1. Mold Damage

Mold claims present unique challenges in Houston because insurers often rely on policy exclusions or sub-limits (sometimes as low as $5,000). Yet if the mold results from a covered peril—such as a sudden pipe burst or storm-created opening—Texas law typically requires coverage for both the underlying water damage and resulting mold remediation, subject to policy language.

2. Wind & Hail Damage

Severe thunderstorms and hurricanes can damage roofs and siding. Disagreements usually arise over scope of repairs (full roof replacement vs. patching) or attribution (pre-existing wear vs. storm damage).

3. Water Damage & Plumbing Leaks

Slab leaks and HVAC pan overflows are frequent in Houston’s clay soil and humid climate. Insurers sometimes assert gradual leakage exclusions, even when the policy covers “sudden and accidental” discharge of water.

4. Hurricane & Tropical Storm Losses

Hurricane Harvey (2017) taught Texans hard lessons about flood vs. wind coverage. While standard homeowners’ policies exclude flood, wind-driven rain is generally covered unless specifically excluded.

5. Fire & Smoke Damage

Although typically covered, disputes emerge about cleaning costs, code upgrade expenses, and Additional Living Expense (ALE) duration.

Texas Legal Protections & Recent Court Decisions

Statutory Deadlines Recap

• Notice of Claim: Consult your policy; most require notice “as soon as practicable,” generally within 30 days.

• Proof of Loss: Some carriers require a sworn proof within 91 days of request.

• Appraisal: No statewide statute sets a deadline, but many policies require demand within 30–60 days after a dispute arises.

Appraisal Clause Mechanics

• Either party may demand appraisal in writing.

• Each side chooses a competent, impartial appraiser within the policy-specified period (often 20 days).

• Appraisers select an umpire; if they cannot agree, a court can appoint one.

• The award, when signed by any two of the three, is binding as to amount of loss but not coverage.

Appraisal is faster and cheaper than litigation but cannot resolve coverage disputes (e.g., whether mold is excluded).

Recent Texas Case Law You Should Know

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) – The Texas Supreme Court confirmed that an insurer’s full, timely payment of an appraisal award generally bars breach-of-contract claims but not necessarily bad-faith claims.

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) – Even if an insurer pays the appraisal award, it may still owe prompt-payment penalties under TIC § 542 if initial deadlines were violated.

• Menchaca v. USAA, 545 S.W.3d 479 (Tex. 2018) – Clarified when policyholders can recover extra-contractual damages even absent policy benefits.

Regulatory Oversight

The Texas Department of Insurance (TDI) licenses insurers, enforces regulations, and accepts consumer complaints. While TDI cannot award damages, its investigations can pressure carriers to settle valid claims.

Step-by-Step Guide When Your Property Claim Is Mishandled

1. Document Immediately

• Take date-stamped photos/video of all damage, concentrating on areas with visible mold growth, water stains, or structural impacts.

• Keep a claim diary noting each conversation with the insurer, adjuster arrivals, and any missed deadlines.

• Preserve receipts for emergency mitigation (fans, dehumidifiers, temporary roof tarps). Under most policies, you must mitigate further damage.

2. Review Your Policy

Look for endorsements or exclusions regarding mold. Some policies offer higher mold limits with paid endorsements. Note deductible amounts and whether you have replacement cost value (RCV) or actual cash value (ACV) coverage.

3. Obtain Independent Estimates

Hire a licensed Texas mold remediation contractor or public adjuster to prepare a line-item estimate. Independent opinions counter the insurer’s initial low figure and become vital evidence in appraisal or litigation.

4. Demand Prompt Compliance

If the carrier misses PPCA deadlines, send a certified-mail demand citing specific statutes (TIC § 542.055-.057) and request immediate payment plus 18% interest.

5. Consider the Appraisal Process

When valuation is the only dispute, a timely appraisal demand can expedite resolution. Be sure to:

• Submit the demand in writing referencing the policy provision.

• Select an impartial appraiser with experience in mold and water damage.

• Track all timelines; if the insurer refuses to participate, that refusal may constitute breach of contract.

6. File a Complaint with TDI

Complete TDI’s online complaint form and upload supporting documents. The agency will contact the insurer within 14 days. While TDI cannot award monetary damages, carriers take regulatory inquiries seriously.

7. Keep an Eye on Statutes of Limitation

Do not let the clock run out. File any lawsuit or appraisal demand well before two-year (extra-contractual) and four-year (contract) deadlines expire.

When to Seek Legal Help in Texas

You should speak with a Houston insurance attorney when:

• The insurer alleges mold resulted from “long-term seepage” and denies coverage.

• Your claim value exceeds policy sub-limits and the carrier refuses to negotiate.

• You suspect systemic bad faith—e.g., adjusters changing reports or ignoring expert evidence.

• The deadline for filing suit is approaching, and the carrier remains unresponsive.

Texas attorneys must be licensed by the State Bar of Texas and comply with disciplinary rules. Reputable firms typically work on contingency, advancing expert costs and collecting fees only if they win or settle your case. How Louis Law Group Helps: Our team analyzes policies, preserves evidence, invokes appraisal, and litigates bad-faith claims statewide. We handle negotiations so you can focus on restoring your home and health.

Local Resources & Next Steps

Texas Department of Insurance – File complaints and research licensed insurers. Harris County District Clerk – Access local court filings if litigation becomes necessary. Lone Star Legal Aid – Free or reduced-fee legal services for qualifying homeowners.

Remember to keep a dedicated claim folder, calendar all deadlines, and seek professional help early. Carriers have teams of adjusters and lawyers—level the playing field by knowing your rights.

Call to Action

If your property insurance claim has been delayed, underpaid, or denied—especially for mold damage—call Louis Law Group at 833-657-4812 for a free case evaluation and policy review today.

Legal Disclaimer

This guide provides general information about Texas property insurance law and does not constitute legal advice. Laws and regulations change, and the application of those laws depends on specific facts. For advice about your situation, consult a licensed Texas attorney.