Houston Texas Mold Damage & Property Insurance Law Guide

11 min read

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

Houston’s subtropical climate, proximity to the Gulf of Mexico, and sprawling urban growth put local homes at constant risk of severe weather events, from Category-4 hurricane winds and torrential rains to quiet but devastating pipe bursts and mold outbreaks. Because the cost of repair can skyrocket in just days, knowing how Texas property insurance law protects—or limits—your rights is essential. Unfortunately, insurers sometimes delay, underpay, or deny claims, leaving policyholders to shoulder expenses they never budgeted for. This guide breaks down everything Houston homeowners need to know, with a special focus on mold damage—one of the fastest-growing sources of property insurance disputes in Harris County.

You will learn:

• Key provisions of the Texas Insurance Code that safeguard prompt, fair claim handling.

• Statutory deadlines every insurer must meet and what happens when they do not.

• How to document damages, preserve evidence, and avoid common pitfalls in mold, wind, hail, and water claims.

• When and how to invoke the appraisal clause or file a bad-faith action.

• Free local resources and a direct line to seasoned Houston insurance attorneys at Louis Law Group (833-657-4812).

Disclaimer: This guide is for educational purposes only and does not create an attorney-client relationship. Laws change, and results depend on your unique facts. Consult a licensed Texas attorney for legal advice.

Understanding Texas Property Insurance Law

Texas Insurance Code – Chapters That Matter Most

The backbone of your rights as a policyholder lies in the Texas Insurance Code (TIC). Three chapters often control the outcome of disputed homeowner claims:

Chapter 542 – Prompt Payment of Claims Act (PPCA)

• Insurers must acknowledge, investigate, and make a decision within strict timelines (discussed below).

• Violations may trigger penalty interest of **18% per year** plus attorneys’ fees.

Chapter 541 – Unfair Settlement Practices

• Prohibits misrepresentations, unreasonable delays, and failure to settle when liability is clear.

• Allows recovery of actual damages, treble (triple) damages for “knowing” violations, and attorneys’ fees.

Chapter 542A – Severe Weather Events

• Imposes pre-suit notice requirements and allows insurers to accept agency of adjusters, potentially reducing exposure.

• Still provides penalties if the carrier acts in bad faith.

Alongside statutory law, Texas common law recognizes a duty of good faith and fair dealing. In Arnold v. National County Mutual, 725 S.W.2d 165 (Tex. 1987), the Texas Supreme Court first acknowledged this duty, and later cases—such as USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018)—further clarified available damages.

Prompt Payment Deadlines at a Glance

• 15 days to acknowledge and begin investigation after receiving written notice of claim (TIC §542.055).

• 15 additional days to request all relevant items from the insured.

• 15 business days (30 for surplus lines carriers) after receiving all requested items to accept or deny the claim in writing (TIC §542.056).

• 5 business days to pay after agreeing to pay.

• Failure triggers penalty interest and fees (TIC §542.060).

For mold, which can spread quickly in Houston’s humid environment, these deadlines are critical. A week-long delay can transform a contained moisture spot into a full structural remediation costing six figures.

Common Property Insurance Disputes in Texas

1. Mold Damage Claims

Mold thrives in Houston, where humidity averages 75% most of the year. Insurance policies often cover mold only if it results from a “covered peril,” such as a sudden pipe burst. Carriers frequently limit coverage to $5,000–$10,000, citing policy endorsements. Disputes arise when insurers:

• Misclassify long-term leaks as “gradual” to deny coverage.

• Apply sub-limits without disclosing them at purchase.

• Undervalue remediation scope by excluding air scrubbers, negative air pressure machines, and post-treatment testing.

2. Wind and Hail Damage

Hurricanes Ike (2008) and Harvey (2017) taught Houstonians the devastation of wind-borne debris. Insurers may attribute roof leaks to “wear and tear” to avoid full roof replacement, prompting appraisal or litigation.

3. Water Damage & Pipe Bursts

Texas’ 2021 Winter Storm Uri caused $10.3 billion in insured losses statewide. Carriers sometimes argue “negligent maintenance” to deny pipe burst claims, or classify resulting mold as an excluded peril.

4. Fire and Smoke Damage

Disputes often center on cleaning versus replacement of smoke-damaged personal property. Texas courts usually favor replacement if lingering odor remains, but carriers may minimize bids.

5. Disagreement Over Repair Scope & Pricing

Insurers rely on estimating software (e.g., Xactimate) that can undervalue Houston labor costs. Independent contractors may price higher due to local demand, leading to contention over “reasonable and necessary” repair costs.

Texas Legal Protections & Regulations Every Policyholder Should Know

Statute of Limitations

• Contract claims: Four (4) years from breach (Tex. Civ. Prac. & Rem. Code §16.004), but many homeowner policies shorten this to two years and one day from the date of loss. Courts generally enforce contractual limitations.

• Chapter 541 actions: Two (2) years from the date the unfair act occurred or was discovered (TIC §541.162), tolled 180 days by written notice letter.

• Prompt Payment claims: Two (2) years from the date of violation, typically tied to delayed payment.

Appraisal Provision

Most Texas homeowners policies contain an appraisal clause allowing either party to demand appraisal when the only disagreement is the “amount of loss.” Key points:

• Either side must invoke appraisal in writing, usually within 90 days of dispute (check policy).

• Each party selects an appraiser; the two pick an umpire. An agreement by any two sets the binding award.

• Appraisal cannot decide coverage—only value.

• Recent case: State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) confirmed appraisal’s limited scope.

Bad Faith & Extra-Contractual Damages

If an insurer fails to settle or improperly denies coverage, Texas law permits recovery of:

• Actual damages, including the unpaid portion of the claim.

• Penalty interest under Chapter 542: 18% plus attorneys’ fees.

• Treble damages for knowing conduct under Chapter 541.

• Potential mental anguish in egregious cases.

Recent Court Decisions Affecting Homeowners

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) – Appraisal payment does not foreclose Prompt Payment penalties.

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) – Appraisal award may limit breach-of-contract damages but not bar bad-faith claims if independent injury exists.

• Menchaca (noted above) – Clarified overlap of contract and extra-contractual remedies.

Step-by-Step Actions After a Property Insurance Dispute

Secure the Property & Prevent Further Damage

• Turn off water, cover roof with tarps, and run dehumidifiers to inhibit mold.

• Keep receipts; mitigation costs are usually reimbursable.

Document Everything

• Take date-stamped photos and video from multiple angles.

• Create a written inventory of damaged personal property with original purchase values when possible.

Request a Certified Copy of Your Policy

• Texas Insurance Code §542.051 entitles you to policy documents. Ask in writing so timelines start.

Obtain Independent Estimates

• Secure at least two bids from licensed Texas contractors experienced in mold remediation.

• Verify they follow [EPA mold remediation guidelines](https://www.epa.gov/mold).

Respond Promptly to Insurer Requests

• Provide requested documents but do not give recorded statements without counsel.

Send a 60-Day Notice Letter If Bad Faith Suspected

• Required under TIC §541.154 and §542A.003 before filing suit.

• Include a summary of violations and your damages. Certified mail recommended.

Consider Invoking Appraisal

• If disagreement is strictly over dollar amount, appraisal can be faster than litigation.

• If coverage is disputed—e.g., mold exclusion—consult counsel first.

File a Complaint with TDI

• Online portal at [Texas Department of Insurance Complaint Process](https://www.tdi.texas.gov/consumer/complfrm.html).
• TDI will contact the insurer for a written response, often speeding resolution.

Track Prompt Payment Deadlines

• Use a spreadsheet. When deadlines lapse, penalty interest starts accruing—leverage in negotiations.

Preserve a Litigation File

• Save all emails, letters, text messages, and estimates. Backups in cloud storage recommended. Your attorney will need them.

When to Seek Legal Help in Texas

Disputes that involve mold can escalate quickly because remediation delays exacerbate heath risks and repair costs. Consider hiring a Houston insurance attorney when:

• The insurer ignores or exceeds PPCA deadlines.

• You receive a partial denial or lowball offer that will not cover certified mold remediation.

• An adjuster misrepresents policy language or pressures you to accept a quick settlement.

• The carrier denies coverage citing “maintenance” or “wear and tear,” but your contractor attributes damage to a covered peril.

• You need help drafting the 60-day notice letter or navigating appraisal.

Louis Law Group’s attorneys are licensed in Texas and dedicated to protecting homeowners. We review your policy for hidden mold exclusions, analyze carrier correspondence for statutory violations, and pursue every avenue—appraisal, Department of Insurance complaints, or litigation—to recover full benefits. Initial consultations are free, and we advance all costs. Call 833-657-4812 today.

Local Houston Resources & Next Steps

• Texas Department of Insurance (TDI): Consumer Help Line 800-252-3439; complaint portal linked above.

Harris County Civil Courts: 201 Caroline St., Houston, TX 77002. Docket search and filing info at Harris County District Clerk.

• Houston Bar Association LegalLine: Free phone advice first and third Wednesday, 713-759-1133.

Texas State Law Library: Offers pro se guides and forms—Online resources. Federal Emergency Management Agency (FEMA): Post-disaster grants may supplement insurance—DisasterAssistance.gov.

Next Steps: If your Houston property insurance claim has been delayed, underpaid, or denied—especially for costly mold damage—don’t wait. Evidence degrades, and deadlines run quickly. Call Louis Law Group at 833-657-4812 for a free case evaluation and comprehensive policy review. We fight aggressively so you can rebuild and move forward.

Legal Disclaimer: Past results do not guarantee future outcomes. Louis Law Group is licensed to practice in Texas. This article is advertising material under Texas Disciplinary Rules of Professional Conduct Rule 7.07.