Good ’ole Steve Badger brought Texas’s new appraisal regulation to my attention. Steve knows how to brighten my morning. Just send an 89-page insurance regulation and let the coffee do the rest. After reading the adopted rules and the Texas Department of Insurance’s responses to public comments, I see meaningful improvements for policyholders, several new traps for the unwary, and one provision that could turn an effort to speed up appraisal into an expensive game of musical umpires.
The new rules list November 24, 2026, as the effective date, but the rules apply to qualifying policies delivered, issued for delivery, or renewed on or after March 1, 2027. The underlying statute already requires qualifying policies issued or renewed on or after January 1, 2026, to contain an appraisal provision. The new procedural requirements have a later applicability date. Simply demanding appraisal next spring does not automatically bring an older policy under the new rules.
The regulation covers personal automobile and residential property insurance. Commercial policies and Texas Windstorm Insurance Association policies are expressly excluded. A homeowner’s appraisal and a commercial building owner’s appraisal may therefore follow different procedures even if the buildings sit across the street from each other.
One welcome provision states that either party may demand appraisal without establishing an impasse. There must be a dispute about the amount of loss, but the policyholder does not have to prove that every possibility of further negotiation has been exhausted. An insurer should not be able to keep appraisal out of reach by insisting that another reinspection or another conversation might finally produce agreement. Of course, this right runs both ways. Insurers can also demand appraisal earlier.
The change with the greatest litigation impact may be the deadline following a Chapter 542A pre-suit notice. For residential claims within the rule’s scope, an insurer receiving that notice must demand appraisal within 60 days after the notice is provided. The separate provision allowing a responding party to demand appraisal by its answer date expressly excludes an insurer that received the Chapter 542A notice. The insurer does not get a fresh appraisal window simply because the policyholder subsequently files suit.
Policyholder attorneys need to read this provision carefully. Filing suit generally ends the plaintiff’s ability to make a new unilateral appraisal demand. There is an exception when the policy requires appraisal before litigation may proceed and the policyholder timely filed suit. But an attorney should examine the actual policy language before relying on that exception. Filing first and deciding later whether appraisal would be useful could surrender the client’s choice.
The ordinary deadline for demanding residential appraisal now tracks the policy’s limitations period for filing suit, subject to earlier litigation-related restrictions. TDI abandoned its proposed general one-year demand deadline measured from the insurer’s acceptance or rejection notice. However, TDI expressly declined to create a tolling rule. A timely appraisal demand provides no automatic extension of suit limitations under this regulation. Lawyers must protect the lawsuit deadline separately. Appraisal can keep moving while the right to sue quietly expires.
The residential process now has a defined timetable. Each party must hire an appraiser and exchange the required contact information within 20 days after the demand. The policy must select one of two prescribed triggers for the appraisers’ 15-day umpire-selection period. The appraisers must attempt to agree within 120 days after the demand. When an umpire is involved, the award must issue within 240 days after the demand. The automobile rules use the same 20-day appraiser appointment period but provide 40 days for the appraisers’ attempt to agree and 180 days for an award involving an umpire. These clocks run from the demand, so appointing the umpire late does not start a fresh award period.
The provision that troubles me most is automatic termination of the umpire’s engagement if the award deadline passes without a written extension agreed to by the parties. For residential appraisal, day 240 arrives, and the umpire’s engagement ends. The appraisers must then choose a new umpire within 15 days. The rule does not ask who caused the delay.
Imagine that an umpire receives the assignment late because the appraisers could not agree on a candidate and judicial appointment took considerable time. The umpire promptly reviews a complicated loss and is close to completing the assignment when the deadline arrives. Unless the parties have agreed to modify it, the regulation removes that umpire. The parties may then pay someone else to review work that was nearly finished. Musical chairs is entertaining at a birthday party. It is less amusing when the homeowner is paying for the chairs.
TDI’s own data makes this concern practical. Residential appraisals involving an umpire had a historical median duration of 193 days and a 75th-percentile duration of 278 days. The new 240-day deadline falls between those figures. TDI declined to establish a replacement umpire’s completion deadline or require refunds of the former umpire’s fees. Its answer is that the parties can agree to extensions. Cooperation is helpful, but a process also needs to work when cooperation is precisely what is missing. It is obvious to me that TDI believes this provision will speed up the appraisal process. I hope TDI is correct.
There are improvements in umpire selection. The policy must preserve either party’s ability to request judicial appointment in a county or district court where the residential property is located. A vendor appointment option may be included, but only the policyholder may invoke it. Other appointment methods require the parties’ written agreement after appraisal has been demanded. The rules also require advance notice of judicial or vendor appointment requests and delivery of the request itself. These provisions should reduce surprise one-sided appointments.
Appraisers and umpires must be competent to evaluate the particular loss, independent from the parties, and disinterested in the outcome. Dwelling appraisals require relevant adjusting, engineering, architectural, construction, repair, or estimating experience or training. Public adjusters remain expressly eligible, but occupational eligibility does not eliminate a financial conflict on an individual claim.
Unfortunately, TDI declined to define independence and disinterest in detail, require standardized relationship disclosures, establish an appraisal license, or adopt an appraisal-specific ethics code. The regulation also permits additional policy qualifications that comply with Texas law. We will need to watch the resulting endorsements closely.
Insurers must also explain appraisal when providing the statutory claim acceptance or rejection notice. The explanation must use plain language and address demands, expenses, appointments, deadlines, and the award’s effect. TDI’s study found that approximately 97% of the residential appraisal awards examined exceeded the insurer’s initial offer.
The regulation preserves appraisal’s focus on the amount of loss. Coverage questions remain subject to the policy and applicable law. At the same time, an insurer cannot automatically remove a valuation dispute from appraisal by calling it “causation.” The final rule also expressly excludes total fire losses subject to Texas’s valued-policy statute, Insurance Code §862.053(a), from its partial-and-total-loss appraisal requirement.
The new rules do not create automatic reimbursement of the homeowner’s appraisal expenses when the award substantially exceeds the insurer’s estimate. They provide no new appraisal-specific private remedy for obstruction.
The new timetable does not give insurers permission to ignore prompt-payment obligations. TDI declined requests to toll statutory interest during appraisal. The existence of a 240-day appraisal deadline does not itself authorize an insurer to withhold money that Texas law already requires it to pay.
I appreciate Steve bringing this development to my attention. The regulation gives Texas appraisal a clearer framework, better notice, and meaningful limits on delayed insurer elections. Public adjusters, appraisers, umpires, and policyholder attorneys should study the rules now, review the new endorsements as they arrive, and protect every applicable deadline.
Thought For The Day
“I dearly love the state of Texas, but I consider that a harmless perversion on my part, and discuss it only with consenting adults.”
—Molly Ivins
