Your Texas Property Insurance Claim Was Denied — Here’s What to Do Next

Hurricane season is in full swing across the Texas Gulf Coast, and with it comes a familiar frustration for homeowners: the claim denial letter. You paid your premiums faithfully, reported the damage promptly, and cooperated with the adjuster’s inspection — yet the insurer has decided your claim does not warrant payment. If this has happened to you, know that a denial letter is not the end of the road. Texas law provides some of the strongest policyholder protections in the country, and there are concrete, time-sensitive steps you can take right now to challenge an unfair denial.

Reviewing Your Texas Insurance Claim Denial Letter

The first step is to carefully read the denial letter itself. Under Texas law, insurers are required to provide a clear, written explanation of the reasons for denial. Common stated reasons include: the damage is excluded under the policy (e.g., flood damage on a standard HO-3 policy), the insurer alleges the damage pre-existed the covered event, the insurer claims you failed to mitigate further damage, or the insurer contends you did not comply with policy conditions such as timely notice or cooperation with the investigation.

Gathering Documentation for Your Property Damage Claim

Once you understand the insurer’s stated basis for denial, you should immediately begin assembling your documentation. Gather your complete insurance policy (including all endorsements and declarations pages), all photographs and videos of the damage, written repair estimates from licensed contractors, any correspondence with the insurance company, the adjuster’s report if available, and any reports from engineers or inspectors. This documentation forms the foundation of any challenge to the denial.

Understanding Texas Insurance Code Protections for Policyholders

Under Chapters 541 and 542 of the Texas Insurance Code, insurance companies owe their policyholders a duty of good faith and fair dealing. When an insurer unreasonably denies a valid claim, delays payment without justification, or fails to conduct a reasonable investigation, the policyholder may be entitled to recover not only the value of the claim itself but also consequential damages, up to three times the actual damages if the trier of fact finds the insurer acted knowingly (Tex. Ins. Code § 541.152(b)), statutory interest on overdue payments, and reasonable attorney’s fees and court costs.

Important Deadlines Under the Texas Prompt Payment of Claims Act

It is also important to understand the deadlines that apply. Under the Texas Prompt Payment of Claims Act, if an insurer fails to pay a claim within 60 days of receiving all items, statements, and forms reasonably requested (Tex. Ins. Code § 542.058), the insurer is liable for the amount of the claim plus statutory interest and attorney’s fees under Section 542.060. For most claims, that interest accrues at 18% per year. Be aware, however, that for claims arising from hail, wind, hurricanes, and other forces of nature, Chapter 542A of the Insurance Code (enacted in 2017) reduces the interest rate to 5% plus the post-judgment interest rate. The Texas Supreme Court confirmed in Hinojos v. State Farm Lloyds (2021) that an insurer cannot escape prompt-payment interest simply by paying an appraisal award later — if it should have paid sooner, interest keeps accruing on the amounts owed. Additionally, the statute of limitations for breach of contract claims against an insurer in Texas is generally four years, though some policies shorten that window by contract, so prompt action is always advisable.

About the Author: Jonathon G. Nixon is the managing attorney of Nixon Law PLLC, a Houston-based litigation firm focused on property insurance disputes, construction defects, personal injury, and commercial litigation. Contact Nixon Law PLLC at (713) 482-1523 or jnixon@nixon-law.com.