Mold Damage & Texas Property Insurance Law in Austin Guide

13 min read

Introduction: Why Austin Homeowners Must Know Their Insurance Rights

Central Texas’ warm climate, periodic flooding, and humidity make mold damage a recurring headache for Austin homeowners. Unfortunately, insurers do not always pay fairly or on time, and many policyholders face lowball offers, lengthy delays, or outright denials. Understanding Texas property insurance law in Austin is therefore critical to protecting your largest investment—your home.

This comprehensive guide explains your statutory rights, key deadlines, and practical steps when battling a mold or other property damage dispute. Written with a policyholder-first perspective, it draws on the Texas Insurance Code, recent court decisions, and local resources. If your claim has stalled, remember you are not powerless. Texas law imposes strict timelines on insurers and provides serious penalties for bad-faith conduct.

Quick takeaways:

• Texas insurers generally have 15 business days to acknowledge a claim and 15 business days to accept or deny it after receiving all requested information (Texas Insurance Code §542.055–.056).

• Mold coverage varies by policy; exclusions can sometimes be challenged if the underlying water event is covered.

• The statutory limitations period for most Texas Insurance Code bad-faith claims is two years plus 180 days (§541.162).

• An appraisal clause may resolve the amount of loss but usually cannot waive your right to statutory interest and attorney’s fees (Barbara Techs. Corp. v. State Farm Lloyds, 2019).

Below you’ll find plain-language explanations, step-by-step checklists, and guidance on when to involve an austin insurance attorney. For a free, no-obligation case evaluation, call Louis Law Group at 833-657-4812.

Understanding Texas Property Insurance Law

The Texas Insurance Code—Your Primary Shield

Two chapters matter most for policyholders:

Chapter 542: Prompt Payment of Claims Act (PPCA)

• 15 business days to acknowledge and request information

  • 15 business days to accept or reject once the insurer receives all items

  • Five business days to pay after agreeing to pay

  • Penalty for non-compliance: 18% annual interest plus attorney’s fees

Chapter 541: Unfair Settlement Practices

• Prohibits misrepresenting coverage, failing to promptly settle claims, or misleading claimants

  • Violations allow recovery of actual damages, treble damages for knowing conduct, and attorney’s fees

Read the statutes directly on the Texas Legislature Online for precise wording.

Policy Language & Mold Limitations

Many Texas homeowners policies place strict limits (often $5,000–$10,000) on mold remediation unless the mold is caused by a covered peril, such as a sudden pipe burst or wind-driven rain that compromises the roof. If your insurer tries to exclude mold categorically, examine:

• Concurrent causation: Mold resulting from a covered water loss may still be recoverable.

• Endorsements: Some policies offer buy-back coverage for a higher premium.

• Texas Deceptive Trade Practices Act (DTPA): Misrepresenting coverage may create additional liability for the carrier.

Recent Texas Case Law Affecting Policyholders

• Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019): Appraisal payment did not bar PPCA interest and fees.

• Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019): Appraisal award may preclude some breach-of-contract claims, but statutory and bad-faith claims can survive.

• State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009): Appraisal decides the amount of loss, not the cause or scope.

These rulings reinforce that appraisal is not the final word if the insurer acted unfairly or too slowly.

Common Property Insurance Disputes in Texas

Although this guide spotlights mold damage, many principles apply to other property losses. Below are frequent claim types we see in Austin:

Mold & Water Intrusion

• Slow plumbing leaks under slabs

  • Roof leaks after hailstorms

  • HVAC condensation issues

• Wind & Hail Damage from severe thunderstorms common in spring and early summer

• Hurricane & Tropical Storm Losses (Austin receives heavy rain bands even when storms make Gulf landfall)

• Frozen Pipe Bursts (remember Winter Storm Uri in February 2021)

• Fire & Smoke Damage

• Foundation Shifts caused by Central Texas clay soils and droughts

Insurers often dispute:

• Causation: arguing damage is pre-existing or due to wear and tear

• Scope: undervaluing square footage of affected drywall, flooring, or cabinets

• Pricing: using outdated cost databases

• Policy Exclusions: claiming the loss falls under mold, pollution, or maintenance exclusions

Texas Legal Protections & Regulations

Statutory Deadlines Recap

ActionDeadlineStatute Acknowledge claim & request info15 business days§542.055 Accept/deny after documentation15 business days (30 in catastrophe)§542.056 Issue payment5 business days§542.057

Appraisal Clause Essentials

Most Texas policies state that either party may demand appraisal if there is disagreement on the amount of loss. Key points:

• You usually have within 60 days of the insurer's written request to name your appraiser, but review your policy for the precise window.

• Appraisal is binding on the dollar value only; you can still litigate coverage, bad-faith, or statutory interest.

• Each side pays its own appraiser; both split the umpire’s fee.

Bad Faith & Deceptive Practices

If an insurer knowingly underpays or misrepresents policy language, you may sue for treble damages under Tex. Ins. Code §541.152 and the Texas Deceptive Trade Practices Act (DTPA). Document every phone call and demand in writing.

Statute of Limitations

• Bad faith or DTPA: 2 years + 180 days from the wrongful act or from when you discovered it (§541.162).

• Breach of contract: 4 years under Tex. Civ. Prac. & Rem. Code §16.051, unless your policy shortens it (often to 2 years).

• Negligence against contractors: 2 years.

Regulatory Bodies & Oversight

The Texas Department of Insurance (TDI) licenses carriers and investigates consumer complaints. Policyholders may also file complaints online or call 800-252-3439. Though TDI cannot force payment, a regulatory complaint often pressures insurers.

Steps to Take After a Property Insurance Dispute

1. Preserve the Evidence Immediately

• Stop further damage: Photograph and video every impacted area. For mold, capture the growth pattern and use a ruler for scale.

• Keep damaged materials (demo debris) until the adjuster documents them.

• Maintain a claim diary listing dates, names, and call summaries.

2. Review Your Policy Thoroughly

• Identify water damage and mold exclusions.

• Check for sub-limits (e.g., $5,000 mold cap) and exceptions that may reinstate coverage.

• Note the appraisal clause timing, suit-limitation period, and proof-of-loss deadline.

3. Obtain Independent Estimates

Insurers frequently rely on Xactimate pricing that may undervalue Austin labor rates. Obtain:

• An IICRC-certified mold remediation proposal

• A general contractor’s scope using local price lists

• Moisture mapping and air-quality testing reports

4. File a Written Demand

Under §542.055, send a certified-mail demand requesting prompt payment, referencing the statutory deadlines. For DTPA/541 claims, a 60-day pre-suit notice letter is required. A qualified Texas property damage claims attorney can draft this.

5. Engage the Appraisal Process, If Appropriate

• Submit a written appraisal demand when only the dollar amount, not coverage, is disputed.

• Choose an appraiser familiar with mold protocols.

• Remember: Appraisal fees can run $1,500–$3,000 per side; weigh the cost versus potential recovery.

6. File a Complaint with TDI

Include the claim number, copies of adjuster correspondence, and a concise explanation of delays or underpayment. Forms are available on the TDI consumer portal.

7. Document Additional Living Expenses (ALE)

If mold remediation renders your home uninhabitable, track hotel bills, meals, and temporary storage. Texas policies typically cover reasonable ALE, but insurers often underpay without receipts.

When to Seek Legal Help in Texas

While many straightforward claims resolve without litigation, you should consult counsel when:

• The carrier denies coverage citing mold exclusions, yet the mold stemmed from a covered water event.

• Payments stop short of contractor estimates by more than 20%.

• The adjuster ignores or misses statutory deadlines.

• Evidence points to unfair settlement tactics or misrepresentation.

Louis Law Group represents only policyholders—never insurers. Our Austin-licensed attorneys investigate, hire trusted experts, and pursue compensation through negotiation, appraisal, or court. Most cases are handled on a contingency fee, meaning no fees 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

Government & Court Contacts

Travis County Civil Courts – filing location for most Austin insurance lawsuits. Austin Code Department – mold remediation permitting and compliance. Austin Bar Association Lawyer Referral Service.

Licensed Professionals

• IICRC Mold Remediation Contractors – search the registry for certified firms.

• Texas Department of Licensing & Regulation – verify mold assessors’ licenses.

Next Steps Checklist

• Gather and digitize all claim documents.

• Schedule a free consultation with Louis Law Group at 833-657-4812.

• Continue to mitigate damage as required by your policy.

• Calendar statutory deadlines to preserve your rights.

Don’t let delay tactics cost you. Call Louis Law Group today or send us your declarations page for a complimentary, attorney-level policy review.

Legal Disclaimer

This guide is for informational purposes only and does not create an attorney‑client relationship. Laws change, and court outcomes depend on specific facts. For personalized advice, consult a licensed Texas attorney.