Texas Proposing a Binding Appraisal Process for Auto & Property Insurance Disputes
Proposal Already Passed Into Law
Texas isn't just proposing a binding appraisal process—it's already law. In 2025, the Texas Legislature passed Senate Bill 458, a significant reform that mandates all personal auto and residential property insurance policies in Texas include a binding appraisal clause. The law became effective September 1, 2025, and applies to forms issued or renewed after January 1, 2026.
Detailed Rules Now Under Review
The Texas Department of Insurance has recently published new draft mandatory appraisal rules for both personal auto and homeowner insurance, which were open to public comment until Monday, October 6. These proposed rules provide the operational framework for how the mandatory appraisal process will work in practice.
How the Process Works
Under the draft rules, every policy must allow either insurer or policyholder to unilaterally demand an appraisal, apply to disputes about the amount of loss or damage, including partial or total loss, and require the appraisal award to be binding. Each party selects an appraiser—one for the policyholder and one for the insurer. The appraisers inspect the damage and try to agree on the value of the loss. If they can't agree, they select a neutral umpire to make the final decision.
Strict Timelines Established
A demand for appraisal must be made in writing within one year from when the insurer accepts coverage; each party must hire its own appraiser within 30 days, and the two appraisers must attempt to agree within 180 days. If appraisers cannot agree on an umpire within 210 days, either party may petition a county or district court for appointment.
Why the Change Was Necessary
Lawmakers acted after reports surfaced that some personal auto insurers had removed the appraisal process for partial losses, despite its longstanding use in the industry, and Senate Bill 458 was passed to ensure that policyholders retain access to appraisal provisions. In 2015, one of the largest personal auto insurance carriers successfully removed the appraisal process from policies for partial vehicle loss.
Expected Benefits for Consumers
Research shows appraisal decisions often favor policyholders, bumping up payouts by around 40%, potentially putting thousands of dollars back in homeowners' pockets. The binding nature of the process creates a faster, less expensive alternative to litigation while ensuring fair resolution of claim disputes.
This isn't a proposal—it's an active reform reshaping how Texas insurance disputes will be resolved starting in 2026, with detailed implementation rules currently under final review.