Your Texas Property Insurance Claim Was Denied — Here’s What to Do Next
Receiving a denial letter from your insurance company after filing a property damage claim is a frustrating and often disorienting experience. 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 substantial protections for policyholders, and there are concrete, time-sensitive steps you can take to challenge an unfair denial.
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.
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.
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 under the Texas Deceptive Trade Practices Act, statutory interest of 18% per annum on overdue payments, and reasonable attorney’s fees and court costs.
It is also important to understand the deadlines that apply. Under Section 542.058 of the Texas Insurance Code, if an insurer fails to pay a claim within 60 days of receiving all items, statements, and forms reasonably requested, the insurer is liable for the amount of the claim plus 18% annual interest from the date the claim was received. Additionally, the statute of limitations for breach of contract claims against an insurer in Texas is generally four years, though 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.