Houston Mold Damage Claims Guide: Texas Property Insurance Law

12 min read

Introduction: Why Houston Homeowners Must Know Their Rights

Houston sits on the Gulf Coast, where high humidity, tropical storms, and occasional freezes create a perfect environment for roof leaks, burst pipes, and ultimately mold growth. When water intrudes and mold spreads, remediation costs can skyrocket. Unfortunately, many policyholders discover only after filing that their carriers undervalue, delay, or even deny mold damage claims. Understanding Texas property insurance law Houston residents rely on is therefore essential to protecting your biggest asset—your home.

This practical guide—written with a homeowner-first perspective—covers the legal framework governing Texas property damage claims, with a special focus on mold. You will find:

• The key provisions of the Texas Insurance Code, including prompt-payment and bad-faith rules.

• Statutory deadlines insurers must meet—and what you can do when they miss them.

• How the appraisal process works in Texas and how it can help unlock fair payment.

• Actionable steps to strengthen your claim from day one.

• Local Houston resources and clear indicators of when to call an experienced Houston insurance attorney.

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.

Understanding Texas Property Insurance Law

Key Statutes Every Policyholder Should Know

The Texas Legislature has enacted several consumer-protection provisions designed to deter unfair claim practices. The three most important chapters are:

Chapter 542 – Prompt Payment of Claims Act (PPCA). Insurers must acknowledge, investigate, and pay or deny most residential property claims within strict timeframes. Violations can trigger 18% annual interest plus attorneys’ fees. See the full text at the Texas Insurance Code, Chapter 542.

• Chapter 542A – Severe Weather-Related Claims. Applies to wind, hail, or rain events. It lays out pre-suit notice requirements and potential liability limitations for agents, but it also preserves your right to sue when carriers act in bad faith.

• Chapter 541 – Unfair Methods of Competition & Unfair or Deceptive Acts (Bad Faith). Gives policyholders a private right of action against insurers that misrepresent coverage, fail to settle when liability is clear, or otherwise handle claims unfairly.

Time Limits Imposed on Insurers

• 15 days: Acknowledge the claim in writing and request any additional information.

• 15 business days after receiving requested info: Accept or deny the claim in writing.

• 5 business days after acceptance: Pay the claim.

• If the carrier reasonably needs more time, it may extend the decision deadline by 45 days, but it must explain why.

Missing any of these triggers PPCA penalties: 18% interest plus reasonable attorneys’ fees, a powerful incentive for carriers to comply.

Statutes of Limitation for Suing Your Carrier

Texas law generally provides:

• Contract claims (breach of policy): 4 years from the date of breach, although many policies shorten this to 2 years + 1 day—check yours carefully.

• Bad faith & deceptive practices (Chapters 541/542): 2 years from when you discovered or should have discovered the unfair conduct.

• Tort claims (negligence, fraud): 2 years from accrual.

These deadlines can be complex; do not rely solely on a general guide. Speak with counsel immediately if you are approaching any limitation.

Common Property Insurance Disputes in Texas

While mold is our focus, it rarely appears in isolation. Houston policyholders often battle carriers on several fronts:

• Wind/Hail Roof Damage: Hailstorms hammer shingles, letting water seep into attics. Carriers sometimes claim the damage is only cosmetic, undervaluing repairs, or invoke cosmetic-damage exclusions.

• Hurricane & Tropical Storm Losses: Storm surge and wind often coexist, but different deductibles apply. Adjusters may allocate more damage to flood (excluded) than wind (covered), shrinking payouts.

• Water Damage from Frozen Pipes: The 2021 Winter Storm Uri exposed gaps in coverage where insurers alleged “ongoing leakage” exclusions.

• Fire & Smoke Damage: Disputes over cleaning vs. replacement and smoke infiltration behind walls.

• Mold Remediation Limits: Many policies cap mold remediation at $5,000 or $10,000—far below typical Houston remediation costs—which can exceed $25,000 for a 2,000-sq-ft home. Whether the cap applies depends on policy language and the cause of loss.

Why Mold Claims Are So Contentious

Mold often follows water that was hidden, slow-moving, or undetected for weeks. Insurers may argue:

• The mold is due to long-term leakage excluded by the policy.

• The homeowner failed to mitigate damages.

• The claim is limited by the mold sublimit.

An experienced advocate can push back by showing the water intrusion was sudden and accidental, triggering full coverage for resulting mold.

Texas Legal Protections & Recent Court Rulings

Appraisal Clause: A Double-Edged Sword

Most Texas homeowner policies include an appraisal provision. Either party can invoke it to resolve disputes over the amount of loss. Key points:

• You and the carrier each appoint an independent appraiser within 20 days of the demand.

• The appraisers select an umpire; if they cannot within 15 days, a court can appoint one.

• An award signed by any two of the three becomes binding—but only on price, not coverage.

Recent Texas Supreme Court cases (e.g., Ortiz v. State Farm Lloyds, 2020) hold that an appraisal award does not bar bad–faith claims when insurers acted unreasonably before appraisal. Therefore, invoking appraisal does not waive your right to sue for delays or underpayments.

Bad Faith Damages

Under Chapter 541, successful policyholders may recover:

• Actual damages (the unpaid claim amount)

• Up to three times actual damages if the carrier acted knowingly

• Reasonable attorneys’ fees and court costs

The threat of treble damages provides leverage in settlement negotiations.

Punitive Case Law Focusing on Mold

In Harris County Flood Control v. Kerr (Tex. App. 2018), the court emphasized that mold contamination can constitute “physical loss” even if the structure remains standing. While not an insurance case, the reasoning has influenced carriers’ interpretations of “direct physical loss” in mold claims statewide.

Step-by-Step Checklist After a Property Insurance Dispute

1. Document Immediately

Within the first 24 hours of spotting water intrusion or mold:

• Take date-stamped photos and videos of all affected areas.

• Keep damaged materials (cut-out drywall, flooring) as evidence.

• Save receipts for temporary repairs (tarps, fans, dehumidifiers).

2. Review Your Policy

Locate the declarations page that lists limits and endorsements. Look for:

• Water or Mold Exclusions: Are they limited or absolute?

• Sublimits: Some policies provide an option to buy additional mold coverage—did you?

• Notice Requirements: Some carriers demand notice within 30 days of discovering mold.

3. Provide Written Notice to Your Insurer

Call first, then follow up in writing (email or certified mail). Include:

• Date and cause of loss

• Description of damages, including any visible mold

• Request for a full copy of your policy

Under Texas PPCA, written notice starts the 15-day clock.

4. Mitigate Damages—But Keep Proof

You are obliged to prevent further damage. Hire an IICRC-certified mold remediator for drying and containment. Keep invoices; these are reimbursable when the claim is covered.

5. Obtain Independent Estimates

Carriers often rely on internal pricing software that undervalues local labor rates. Secure at least two Houston-area contractor bids. Independent Xactimate estimates can rebut lowball offers.

6. Track All Communications

Create a claim journal noting:

• Date, time, and name of every adjuster contact

• What was promised and when

• Missed deadlines

This file becomes evidence if litigation is necessary.

7. File a Complaint with the Texas Department of Insurance (TDI) if Needed

If an insurer ignores deadlines or acts unfairly, you may submit a free complaint to the Texas Department of Insurance. TDI cannot order payment but often prompts faster responses.

8. Demand Appraisal—Strategically

If the dispute is solely about how much, send a written appraisal demand. However, if coverage itself is contested (e.g., carrier says mold cap applies), speak with counsel first; appraisal will not resolve that dispute.

9. Preserve Limitation Deadlines

If your policy imposes a 2-year suit limitation, send a tolling agreement request to the carrier at least 60 days before the deadline. Carriers sometimes agree to extend while negotiations continue.

When to Seek Legal Help in Texas

While many small claims resolve with persistence, certain red flags warrant immediate legal intervention:

• Carrier cites an “ongoing leakage” or “maintenance” exclusion that conflicts with the facts.

• Significant gap (>30%) between your contractor’s estimate and the insurer’s offer.

• Repeated requests for documentation already provided.

• Threats of policy cancellation or rescission.

• Approaching the contractual statute of limitation.

A seasoned Houston insurance attorney can:

• Send statutory pre-suit notice letters satisfying Chapter 542A.

• Invoke appraisal or pursue litigation strategically.

• Retain industrial hygienists to prove the scope of mold contamination.

• Seek 18% interest, treble damages, and fees so you keep more of your recovery.

Louis Law Group represents policyholders statewide, leveraging deep knowledge of Texas property damage claims and local Houston court tendencies. Our lawyers are fully licensed in Texas and regularly litigate in Harris County District Court and the U.S. Southern District of Texas.

Suspect your claim is being mishandled? Call 833-657-4812 for a free, no-obligation consultation.

Local Resources & Next Steps

Texas Department of Insurance (TDI) Consumer Help Line: 800-252-3439 Texas Judicial Branch – Court Locator: Find the proper venue if you need to file suit. Houston Bar Association LegalLine: Free legal advice on designated evenings.

• City of Houston 3-1-1: Report building-code violations that may relate to ongoing water intrusion.

Final Thoughts

Houston’s climate makes mold claims inevitable, but unfair treatment by insurers is not. By arming yourself with Texas-specific legal knowledge, meticulously documenting your loss, and seeking professional guidance when red flags appear, you can level the playing field.

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

Legal Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Consult a qualified attorney regarding your specific situation. Louis Law Group maintains offices in Texas and its attorneys are licensed to practice law in the State of Texas.