HOUSTON, TX – On May 16, 2025, a derecho with winds exceeding 100 mph tore through Houston, causing an estimated $5-7 billion in damages. Downtown skyscrapers lost thousands of windows. Commercial roofs were stripped away. Businesses closed for weeks without power. The devastation rivaled Hurricane Ike in 2008.
Nearly six months later, many Houston business owners are still fighting insurance companies for fair settlements. Some haven't received a single payment. Others got lowball offers that don't cover half their actual losses. Homes and businesses across Harris County remain patched with temporary tarps, their owners stuck in an insurance nightmare that shows no signs of ending.
This isn't just bad luck—it's a systematic pattern of insurance company tactics designed to delay, deny, and underpay legitimate windstorm claims. Here's what Houston business owners need to know about why these claims drag on for years.
The May 2025 Derecho: Houston's Unexpected Catastrophe
Derechos are rare in Southeast Texas, which is why the May 16 storm caught so many by surprise. Unlike hurricanes that build for days and allow preparation time, the derecho formed rapidly and struck with little warning.
What Happened
- 100+ mph straight-line winds swept through Harris County and surrounding areas
- Downtown Houston sustained catastrophic damage—18 high-rise buildings lost windows
- Widespread power outages left 1 million customers without electricity
- 8 deaths directly attributed to the storm
- $5-7 billion in total economic losses
Why It Was So Destructive Downtown
Research from Florida International University revealed something surprising: downburst winds from derechos interact differently with tall buildings than hurricane winds do. The impulsive, concentrated nature of derecho winds creates more suction and pressure on building facades, causing more damage at similar wind speeds.
This explains why the derecho shattered thousands of downtown windows while Hurricane Beryl—which hit just two months later with similar wind speeds—caused less high-rise damage.
The Insurance Coverage Gap Most Houston Businesses Didn't Know Existed
Texas law requires separate windstorm coverage in certain coastal counties through the Texas Windstorm Insurance Association (TWIA). But Harris County's designation creates confusion that insurers exploit.
Harris County's Split Coverage Requirement
Parts of Harris County fall within the "catastrophe area" where standard commercial property policies exclude wind and hail damage. These businesses must purchase separate windstorm coverage through TWIA or private carriers.
The problem: Many business owners don't realize their standard commercial policy excludes wind damage until they file a claim after a derecho.
Real-world example: A Houston retail center sustained $850,000 in roof damage from the derecho. The owner assumed his $2 million commercial property policy covered it. Six weeks after filing, he received a denial letter citing the wind/hail exclusion. He had never purchased separate windstorm coverage because his broker never explained he needed it. His only recourse: sue the broker for errors and omissions.
Named Storm vs. Derecho: The Coverage Trap
Many Texas windstorm policies distinguish between "named storms" (hurricanes, tropical storms) and other wind events. Coverage limits, deductibles, and even whether coverage applies at all can differ.
Insurers initially argued the May derecho wasn't a "named storm," meaning higher deductibles applied—or in some cases, no coverage at all. Only after public outcry and regulatory pressure did most insurers concede that derecho damage should be treated similarly to named storm damage.
Why this matters: A business with a $500,000 claim might face a $50,000 deductible for named storms but a $125,000 deductible for "other wind events." That $75,000 difference often determines whether businesses can afford repairs.
Five Tactics Insurers Use to Delay Derecho Claims
Texas Prompt Payment of Claims Act (Chapter 542) requires insurers to:
- Acknowledge claims within 15 days
- Approve or deny within 30 days after receiving all necessary documentation
- Issue payment within 5 days of approval
If they miss these deadlines, they owe 18% annual interest plus attorney fees. Yet many Houston derecho claims have blown past these deadlines with no consequences. Here's how:
Tactic #1: The Endless Documentation Loop
Insurers request documentation in waves, never asking for everything at once:
- Week 1: "We need photos of the damaged roof"
- Week 3: "We need contractor estimates"
- Week 5: "We need three competitive bids"
- Week 7: "We need engineering reports"
- Week 9: "We need proof of property values"
Each request resets the 30-day clock, allowing insurers to delay indefinitely while technically complying with the statute.
Defense: Submit comprehensive documentation upfront. Include photos, videos, estimates, financial records, and engineering reports with your initial claim. Don't wait for them to ask.
Tactic #2: Claiming "Pre-Existing Damage"
This is the most common denial tactic for roofing claims. Adjusters photograph minor wear-and-tear issues (slight granule loss, small cracks, edge curling) and argue the roof was already damaged before the derecho.
Their argument: "The roof was at 60% of its useful life and would have needed replacement within 5 years anyway. The derecho just accelerated inevitable failure."
Your challenge: Proving the roof was functional before the storm and that the derecho caused the failure—not gradual deterioration.
Defense: Conduct pre-storm roof inspections annually and keep reports on file. If you have a recent inspection showing the roof was in good condition, insurers can't claim pre-existing damage. Post-storm, hire an independent engineer immediately to document that damage patterns are consistent with sudden wind events, not gradual failure.
Tactic #3: Causation Disputes
Insurers blame damage on perils the policy doesn't cover:
- "The roof damage was caused by hail, not wind" (if your policy excludes hail)
- "The water damage was caused by flooding, not wind-driven rain" (if you don't have flood insurance)
- "The damage resulted from poor maintenance, not the storm"
These disputes require expensive expert analysis to resolve, delaying claims for months or years.
Defense: Forensic engineers can determine causation through scientific analysis—wind damage has distinct patterns (uplift, peeling, directional tears) that differ from hail (circular impact marks) or maintenance issues (isolated deterioration). Pay for expert analysis immediately after the storm, before evidence deteriorates.
Tactic #4: Business Interruption Calculation Games
Business interruption (BI) claims compensate for lost income while your business cannot operate. But insurers minimize these claims by:
Disputing the period of restoration: "It should have taken 2 months to repair your roof, not 6 months." (Ignoring contractor shortages and supply chain issues after major disasters.)
Challenging income calculations: "Your revenue projections are inflated. We'll only pay based on last year's actual revenue." (Ignoring seasonal variations and growth trends.)
Excluding extended costs: "We won't pay for the extra three months it took because your contractor was delayed." (Even though contractor delays after major disasters are foreseeable.)
Real-world example: A Houston law firm lost its office for 7 months due to extensive water damage after the derecho blew out windows. Revenue dropped $600,000 during the closure. The insurer offered $180,000, claiming the firm should have relocated to temporary space within 2 months. The actual cost to lease comparable temporary space: $55,000/month—more than the BI coverage would have paid.
Tactic #5: Lowball Initial Settlements
Insurers count on business owners being desperate for quick cash. They offer settlements far below actual losses, hoping you'll take the money and sign away rights to additional claims.
Their pitch: "We're offering $125,000 to settle your claim quickly so you can get back to business. This is our best and final offer."
The reality: Independent appraisal shows the actual loss is $480,000. But if you accept the $125,000 and sign the release, you're done. You can't come back later when you discover the offer was inadequate.
Defense: Never accept the first offer without independent valuation. Texas law gives you leverage—insurers who unreasonably delay claims face penalty interest and attorney fees. Use that leverage.
The Texas Prompt Payment Law: Your Strongest Weapon
The Texas Prompt Payment of Claims Act is one of the strongest consumer protection laws in the nation—but only if you know how to use it.
The 18% Interest Hammer
If your insurer misses statutory deadlines without a reasonable basis, they owe 18% annual interest on the unpaid claim amount. This accrues from the date payment should have been made.
Example: $300,000 claim delayed 6 months = $27,000 in penalty interest.
This interest rate exceeds most businesses' cost of capital, meaning the longer the insurer delays, the more it costs them. But many policyholders don't know to demand it.
Attorney Fees Provision
If you sue and win, the insurer must pay your attorney fees. This levels the playing field—you can afford to hire top insurance attorneys because the insurer will ultimately pay their fees if you prevail.
Why this matters: Insurance companies count on policyholders giving up because they can't afford years of litigation. The attorney fees provision removes that advantage.
How to Trigger Penalty Interest
Document every delay:
- Date you filed the claim
- Date insurer acknowledged receipt
- Date you provided each piece of requested documentation
- Date insurer received all necessary documentation
- 30-day deadline for approval/denial
- Date payment should have been issued
If the insurer misses the 30-day deadline after receiving complete documentation, penalty interest begins accruing. Your attorney can send a demand letter citing Chapter 542 and threatening litigation if the claim isn't paid promptly with accrued interest.
Many insurers settle quickly once they realize you're serious about enforcing the statute.
Why Derecho Recovery Takes Years: The Contractor Shortage Crisis
Even when insurers eventually pay fair settlements, Houston businesses face another obstacle: contractor availability.
The Perfect Storm of Demand
- May 2025 derecho: $5-7 billion in damage
- July 2025 Hurricane Beryl: Additional billions in damage
- Normal summer hail season: Routine wind and hail claims
Every qualified roofer, glazier, and restoration contractor in Southeast Texas is booked 18-24 months out. This creates cascading problems:
Supply Chain Disruptions: Materials like specialized commercial roofing membranes, energy-efficient glass, and structural steel take months to manufacture and ship.
Price Increases: High demand + limited supply = 40-60% price increases for materials and labor. But insurance settlements are based on pre-storm pricing, leaving businesses to cover the gap.
Quality Concerns: Unlicensed contractors from out of state flood disaster areas, performing substandard work that creates new problems.
Business Interruption Extensions: What should take 3 months stretches to 12 months or longer, but insurers refuse to extend BI coverage for delays they claim are "unreasonable."
Four Steps Houston Businesses Should Take Today
Step 1: Conduct Immediate Policy Review
Don't wait for the next storm. Review your commercial property policy now:
- Do you have separate windstorm coverage if you're in a TWIA area?
- What's your wind deductible—flat dollar amount or percentage of value?
- Do you have business interruption coverage? What are the limits and time restrictions?
- Does your policy cover temporary repairs to prevent further damage?
- Do you have ordinance and law coverage for building code upgrades?
If you discover gaps, fix them before the next storm season.
Step 2: Document Current Property Condition
Create a comprehensive record of your property's current state:
- Professional photographs of roofs, facades, and structural systems
- Engineering inspections of critical building systems
- Inventory of all business personal property with serial numbers and purchase dates
- Financial records proving revenue and expenses
- Video walkthrough of entire facility
This documentation becomes critical evidence if you need to prove storm damage in the future.
Step 3: Understand Your Rights Under Texas Law
Familiarize yourself with Chapter 542 requirements:
- 15-day acknowledgment deadline
- 30-day approval/denial deadline
- 5-day payment deadline
- 18% penalty interest for unreasonable delays
- Attorney fees if you prevail in litigation
If your insurer is delaying your derecho claim, consult with a Texas insurance attorney who specializes in commercial property claims. Many offer free consultations and work on contingency (you pay only if you recover).
Step 4: Build Your Recovery Team Before Disaster Strikes
Don't wait until after a storm to find contractors and experts:
- Pre-qualify roofing contractors, glaziers, and restoration companies
- Establish relationships with forensic engineers who can document damage
- Identify public adjusters who specialize in commercial claims
- Connect with business interruption specialists who can accurately calculate losses
- Retain insurance coverage attorneys who know Texas law
Having these professionals on speed dial before disaster strikes can cut recovery time in half.
Next Steps: Protecting Your Houston Business
The May 2025 derecho exposed fundamental weaknesses in Texas windstorm coverage and claims handling. Business owners who thought they were protected discovered they weren't—or that getting insurers to pay required legal battles lasting years.
Work with insurance professionals who understand:
- The split coverage requirements in Harris County and surrounding areas
- Named storm vs. unnamed wind event coverage distinctions
- Business interruption coverage that adequately protects your actual income at risk
- The importance of pre-disaster engineering inspections and documentation
- Your rights under the Texas Prompt Payment of Claims Act
Most importantly: if you're still fighting with your insurer over derecho damage from May 2025, don't give up. Texas law is on your side—but only if you enforce it. Consult with an attorney who specializes in insurance disputes. The 18% penalty interest and attorney fees provisions level the playing field, giving you leverage to force fair settlements.
Source: Houston Fire Department, Houston Chronicle, Texas Department of Insurance, Florida International University derecho research