• Atlanta
• Boston
• Dallas
• Ft. Lauderdale
• London
• Minneapolis
• New York
• Oakland
• Philadelphia
• Washington, DC

by Austin Taylor

Last year, the Texas Legislature passed Senate Bill 458 (89th Legislature, 2025), which added Chapter 1813 to the Texas Insurance Code. SB 458 requires certain insurers writing personal automobile or residential property insurance to include an appraisal provision in their policies and directs the Texas Department of Insurance (“TDI”) to adopt rules necessary to implement the chapter, including rules that mandate appraisal, establish the period in which appraisal must be completed, and address the qualifications and selection of appraisers and umpires. TDI posted an informal first draft of those rules on September 22, 2025, and, candidly, it needed some work.

Now, after a seven-month wait, TDI has released a revised set of proposed rules, and they're a marked improvement over the first iteration. TDI clearly listened to stakeholder input this round, and special credit is due to David Muckerheide and the TDI team for genuinely engaging with the comments and incorporating thoughtful fixes that will make the process fairer and faster. Because these proposed rules will define how Texas property and auto appraisals will operate moving forward, they matter to every carrier and policyholder advocate who touches first-party claims in this state. Below are some of the highlights of the proposed changes that will have the most impact on how first-party property appraisals have historically worked in Texas.

• No more "mutual consent" requirement — Either party can now unilaterally invoke appraisal without needing the other side to agree. Thus, any policy provision requiring the consent of both parties to proceed with appraisal is presumably now invalid. The proposal also does away with any requirement that the parties demonstrate an "impasse" before demanding appraisal; a live dispute over the amount of loss is enough, even if the parties are still talking. As a practical matter, that means policyholders and carriers alike can move to compel appraisal earlier in the process without waiting for negotiations to formally break down, and neither side can stall by withholding consent. But, of course, the policy requirement that there be a “dispute” as to the amount of loss still exists. Finally, the rule still permits an insurer to require proof of loss consistent with Insurance Code Chapter 542, Subchapter B, so this isn't a free pass to skip the claims-handling process.

• 240-day completion deadline — For residential property claims, appraisers will have 120 days to try to reach agreement on the amount of loss, and if an umpire is needed, the appraisal award must be issued no later than 240 days from the demand. The rules also add real teeth: if the 240-day mark passes without an award, the umpire's engagement is automatically terminated and the appraisers must choose a new umpire within 15 days—a mechanism that should give everyone an incentive to stay on schedule. In addition, each party must hire an appraiser and exchange names and contact information in writing within 20 days of the demand, preventing the early-stage foot-dragging that can frequently bog down the appraisal process. And for those complex losses where 240 days truly isn't enough, the parties can modify any deadline by written agreement after the appraisal process notice is provided, preserving flexibility without undermining the default structure.

• Broadened qualifications for appraisers and umpires — The proposal sets clear minimum qualifications: competence to evaluate the type of loss in dispute, independence from the parties, and disinterest in the outcome. For residential property appraisals involving loss to a dwelling, participants must also hold specific credentials. Specifically, they must be: (1) a licensed adjuster or public adjuster with residential estimating experience; (2) an engineer or architect with experience in residential construction, repair, or damage investigation; or (3) an individual with occupational experience or training in the relevant type of construction, repair, or loss estimation. That last category is important as it addresses one of the concerns we raised with the initial draft – ensuring that only qualified building consultants can serve as appraisers. It is also important to remember that these are minimum qualifications. Policies may have additional or more specific requirements so long as they do not conflict with these minimum qualifications.

• Unilateral umpire appointments prohibited — This is a big deal, and long overdue. No more surprise, one-sided umpire appointments. Now the requesting party must give the other side at least 10 days' written notice of their intent to seek an umpire appointment. The requesting party must also provide the other side with a copy of the actual request before or when it is submitted. This new two-layer safeguard should put an end to the scenario where one party wakes up to discover an umpire has already been appointed without their knowledge or input. The proposal also acknowledges the current practice by some insurers of having an alternative to judicial umpire appointments. Insurers can continue to offer appointment by an independent vendor—provided they list at least two vendors and let the policyholder choose, or allow only the policyholder to invoke the vendor option. That design ensures the policyholder retains meaningful choice in the selection process regardless of the method used. For many who have seen the umpire selection process abused, these guardrails are a welcome improvement.

• "Use It or Lose It" rule — For residential property claims, a party must now demand appraisal in writing within one year of the insurer's acceptance or rejection of the claim. If litigation starts, the respondent (usually, but not always, the carrier) gets a 30-day window to demand appraisal even if the one-year period has run, thus preserving appraisal as an off-ramp from costly discovery fights when the dispute is really about dollars rather than liability. The current draft triggers the 30-day window from the lawsuit filing date, but we would suggest changing this deadline to run from the answer date instead. Obviously, this prevents scheming policyholder attorneys from filing lawsuits and then waiting 30 days to effectuate service to prevent the insurer from invoking appraisal.

• TDI's open comment period is underway, with written comments due by 5:00 p.m. CT on June 8, 2026, and a public hearing set for June 2, 2026—both in person and virtual.

These changes are currently slated to apply to policies issued or renewed on September 1, 2026. Prior to this deadline, carriers will need to file amended policy forms consistent with these new guidelines with TDI for review and approval.

We'll be tracking developments closely and will provide additional updates and guidance as we progress through the adoption period.

_________________________________

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.