What a homeowners policy usually covers
The Texas Department of Insurance (TDI) explains in its water damage and mold guidance that most homeowner and renters policies cover sudden and accidental water damage, such as a burst pipe, a toilet overflow, or a broken washer hose. TDI says mold is covered if it grows on an item damaged that way. TDI also says coverage varies by company, so read your policy or ask your agent.
TDI says most home policies don't cover water damage from gradual leaks or seepage, including mold from that damage. TDI's home insurance guide says most policies don't cover flooding, a continuous water leak, mold removal except to repair damage from a covered risk, or wear and tear.
TDI says most home policies don't include mold cleanup and testing after a damaged item is removed. The agency says your company may let you add coverage for cleanup after a covered loss. TDI lists backup of sewers or drains, damage to foundations or slabs, and mold removal as common endorsements, which are add-ons to a policy. IICRC's S500 standard names sewage among its examples of Category 3 water, which it defines as grossly contaminated.
Flood damage needs its own policy
TDI says most home policies don't cover flood damage. TDI says that includes mold that grows after a flood. TDI says you can get a separate flood policy from your insurance company or the National Flood Insurance Program (NFIP). If your agent doesn't sell flood insurance, TDI says to call 877-336-2627. TDI also says your lender requires flood insurance if your home is in a designated flood zone.
According to TDI on flood insurance, most flood policies have a 30-day waiting period before coverage starts. TDI says a flood policy covers the home up to $250,000, and belongings need a separate flood policy with coverage up to $100,000.
Reporting the claim and protecting the house
TDI advises telling your insurance company about water damage as soon as possible. According to TDI, you usually must report damage that was hidden from view within days after you first see it, and some policies have a one-year deadline unless you can show good cause for the delay. TDI also tells you to stop the water at the main valve or the valves under sinks and near appliances. Start drying the area as soon as you can, TDI says, because mold can start growing within a day after a leak.
TDI recommends taking photos or video of the damage before repairs, listing damaged property, and keeping damaged items until the adjuster has seen them. To protect the house, TDI says to make temporary repairs and keep the receipts. TDI warns against making permanent repairs until the insurance company sees the damage because the company might deny the claim. The agency also suggests being there when the adjuster looks at the damage, with your contractor if you can, since the contractor can talk to the adjuster about estimates.
For a mold claim, TDI advises checking that the mold professional has a state mold license. TDI says you'll need an inspection showing the mold was removed and the cause was fixed. The agency also says mold professionals must provide a certificate that the mold was removed.
Texas Insurance Code Chapter 542 deadlines
Under Texas Insurance Code Chapter 542, Subchapter B (prompt payment of claims) sets the insurer's deadlines on a claim you make under your own policy. Under Chapter 542, a business day is any day except a Saturday, a Sunday, or a state holiday, and the deadlines are:
- Under Section 542.055, within 15 days after it gets notice of your claim, the insurer acknowledges it, starts the investigation, and asks for the items, statements, and forms it reasonably believes it will need. An eligible surplus lines insurer has 30 business days.
- Under Section 542.056, within 15 business days after it has everything it needs to secure final proof of loss, the insurer accepts or rejects the claim in writing and gives its reasons if it rejects. TDI says the company may ask you for a signed, notarized proof of loss form that lists your damaged or lost items. The insurer has 30 days when it has a reasonable basis to believe the loss came from arson.
- Under Section 542.056(d), if the insurer can't decide in that time, it tells you why within the same period, then accepts or rejects the claim within 45 days of telling you.
- Under Section 542.057, the insurer pays within 5 business days after it tells you it will pay. An eligible surplus lines insurer has 20 business days.
TDI says surplus lines companies are out-of-state companies that insure risks Texas companies won't. TDI takes complaints in writing through its online complaint portal. TDI's Help Line is 800-252-3439. Under Section 542.059, these deadlines extend by 15 days after a weather-related catastrophe or major natural disaster, as defined by the commissioner of insurance. Under Section 542.060, an insurer liable for the claim that doesn't comply owes interest on the claim amount as damages, plus reasonable and necessary attorney's fees. This is general information, and an attorney can tell you how these rules apply to your own claim.
Contractors and public adjusters
Under Texas Insurance Code Chapter 4102, Section 4102.163, a contractor can't act as a public adjuster or advertise to adjust claims for property where it provides or may provide contracting services, even if it holds a public adjuster license or a power of attorney. TDI's roofing and insurance rules give examples of improper conduct, including offering to negotiate claim settlements or file the claim for the policyholder. TDI also lists telling insurance companies the contractor represents the policyholder or can speak for them on coverage.
TDI Bulletin B-0006-21 says contractors can give estimates and discuss those estimates and other technical information with the insurer or its adjuster. If you're choosing a contractor for the work, use how to check a restoration company to review one.
A public insurance adjuster negotiates with your insurer for you, and Texas Insurance Code Section 4102.051 requires a TDI license. Under Texas Insurance Code Section 4102.158, a public adjuster can't take part in the repair or restoration of property on a claim it adjusts. TDI on public adjusters says a public adjuster can charge up to 10% of the total the insurance company pays on the claim, and you have 72 hours after signing to cancel the contract. TDI says its Help Line at 800-252-3439 can tell you whether one is licensed and how many complaints have been filed.
The deductible is yours to pay
Under Texas Business and Commerce Code Section 27.02, a seller paid from a property insurance claim can't pay, waive, absorb, or decline to collect your deductible without the insurer's consent. The seller also can't give a rebate or credit that offsets it, help you avoid paying it any other way, or advertise or promise to do any of those things without the insurer's consent. Under Section 27.02, a violation is a Class B misdemeanor. Section 27.02 also requires a contract of $1,000 or more reasonably expected to be paid from a property insurance claim to include a deductible notice in at least 12-point bold type.
TDI on deductible waivers describes one way a deductible can be covered. In TDI's example, the estimate exceeds the cost of repairs, so the extra insurance money covers the deductible. TDI says your insurer can ask for proof that you paid the deductible, such as a canceled check, a money order receipt, a credit card statement, or a copy of your payment plan with the contractor. If someone offers to waive your deductible, TDI says to report the offer to your insurance company and the Texas Attorney General's Consumer Protection Hotline at 800-621-0508.
Appliance leaks and your claims history
Under Section 544.353 of Texas Insurance Code Chapter 544, an insurer may not use a prior appliance-related claim to set your rate or decide whether to issue, renew, or cancel your policy if the damage was properly remediated and the remediation was inspected and certified by someone knowledgeable and experienced in water damage remediation. Section 544.352 defines an appliance as a household device run by gas or electricity, including hoses attached to it, such as a water heater, dishwasher, icemaker, clothes washer, refrigerator, or air conditioning unit. The Texas Insurance Code protection doesn't apply to a person, or a property, with three or more appliance-related claims within three years.
TDI's home insurance guide says a company may refuse to renew after three or more nonweather-related claims in three years. TDI says the first two appliance-related water damage claims don't count if you fixed the damage and it passed inspection by a qualified inspector. Keep the remediation paperwork and inspection report with your policy records.