The Texas Department of Insurance (TDI) has shared a draft of new rules to put into effect a recent law requiring all personal auto and home insurance policies to include a binding appraisal clause. This move is designed to help settle disputes between insurers and policyholders about the amount of a loss, without getting into whether the loss is actually covered by the policy.
The law behind these rules, Senate Bill 458, was passed this year. It applies only to personal auto and residential property policies. Commercial policies and those from the Texas Windstorm Insurance Association are not affected.
Under the proposed rules, either the insurer or the policyholder can ask for an appraisal if they disagree on the loss amount. For home insurance claims, an appraisal request must be made in writing within one year after the insurer sends a notice agreeing to cover the loss. The two appraisers then have up to 180 days to agree on the amount of damage.
If the appraisers cannot agree, they must pick an umpire to settle the dispute. If they cannot agree on who that umpire should be, either side can ask a local court to appoint one. Once an umpire is chosen, the final appraisal decision must come within 180 days.
For auto insurance claims, the timeline is shorter. A demand for appraisal has to be made within 120 days, and the appraisers get 75 days to find an agreement. The umpire then has 180 days to make a decision if needed.
The rules also say insurers must clearly explain the appraisal process, deadlines, and the right to request an appraisal in the notice accepting a claim. Both sides can agree in writing to extend any deadlines during the appraisal process.
TDI plans to finalize these rules by the end of the year. The new law and rules are set to kick in on January 1, 2026, with a 60-day period afterwards to get everything up and running.
This new appraisal rule aims to speed up and simplify how disputes over claim amounts get handled, giving both sides a clear path to a fair resolution without dragging out fights over losses.