The Texas Department of Insurance (“TDI”) has proposed new rules to carry out a Texas law passed in 2025. If the rules are approved, they will apply to certain residential and auto insurance policies issued or renewed on or after September 1, 2026. TDI will take public comments through June 8, 2026, and it will hold a public hearing on June 2, 2026.
For those of us who represent policyholders in property insurance disputes, this proposal is long overdue. The appraisal process is one of the most important tools a policyholder has. In theory, it is designed to be a faster, less expensive alternative to litigation when a dispute about the amount of a loss cannot be resolved. But over the years, that tool has been quietly chipped away through delay, confusion, and tactics that too often left the policyholder at a disadvantage. These proposed rules address several of those problems head-on. They are not perfect, and a few provisions deserve serious scrutiny. But on balance, they represent meaningful progress for the insurance industry as a whole.
Here is what you need to know.
The Good: Protections That Matter
No More Unilateral Umpire Appointments
The proposed rules contain an important procedural protection that should not be overlooked. When the appraisers fail to jointly agree on an umpire, a party requesting a court-appointed umpire or an appointment through an independent vendor must first provide the other party with written notice at least 10 days before making the request. The requesting party must also provide the other party with a copy of the actual request before or at the time it is submitted.
This may seem technical, but in practice it is critical. There are times when insurers have quietly petitioned a court for appointment of an umpire without any notice to the insured. By the time the policyholder learned what happened, an umpire was already in place and had been appointed in a proceeding the policyholder never had the chance to participate in. In fairness, I have seen policyholders employ the same tactics. But that kind of conduct is particularly harmful to policyholders, who often lack the same legal and financial resources as insurance carriers. The 10-day notice requirement and the obligation to share the actual appointment request should close the door on this practice.
Mandatory Time Limits to Complete Appraisal
Appraisals have been taking longer and longer to finalize. Under the proposed rules, that changes.
For residential property claims, once appraisal is demanded:
- Each party has 20 days to hire an appraiser and share their contact information.
- The appraisers have 15 days to jointly select an umpire (or 15 days after they fail to agree on the amount of loss, depending on the appraisal provision).
- The appraisers must attempt to agree on the amount of loss within 120 days of the demand.
- If an umpire is involved, an award must be issued within 240 days of the demand.
These are real deadlines with real consequences. If an umpire fails to issue an award by the deadline, the umpire’s engagement is terminated, and the appraisers must choose a new umpire within 15 days. While I believe there is room for improvement, it is a meaningful step towards ensuring appraisals are completed timely.
Appraisal Is Mandatory If Invoked—No More “We Need to Think About It”
Under the proposed rules, either party has the right to unilaterally demand appraisal, and that right is not conditioned on the parties reaching an impasse. As the proposed rule makes clear, a dispute means a disagreement. It does not require the parties to show that there is no chance of reaching an agreement.
This matters because carriers have long used “impasse” arguments as a delay tactic. Even in situations where appraisal was clearly contractually mandated, insurers sometimes respond to appraisal demands by claiming the demand was “premature,” even while sitting on documents that had been provided to them weeks or months before. These proposed rules should substantially limit that argument. A disagreement about the amount of loss is all that is needed to trigger the right to appraisal, and any appraisal provision that conditions that right on reaching an impasse will no longer be allowed.
Insurers Must Inform Policyholders About Appraisal—In Writing
At the same time an insurer provides its notice of acceptance or rejection of a claim under Tex. Ins. Code § 542.056, it will now be required to provide the policyholder with written notice about the appraisal process. That notice must be written in plain language and must explain where the appraisal provision is located in the policy, how to demand appraisal, the policyholder’s responsibilities, how umpire selection works, all applicable deadlines, and the effect of the appraisal award.
Most policyholders have never read their entire policy. Those who try to read it often get confused trying to understand why an endorsement may say one thing while another part of the policy says something different. Many do not know appraisal exists, what it is, or how it works. The obligation to provide this notice ensures that policyholders have at least the information they need to begin making an informed choice about whether to invoke the process.
Minimum Qualifications for Appraisers and Umpires
The proposed rules establish baseline qualifications for anyone serving as an appraiser or umpire. All appraisers and umpires must be: (1) competent by training or experience to evaluate the type of loss in dispute; (2) independent from the parties; and (3) disinterested in the outcome. For residential property appraisals involving loss to a dwelling, the rules go further, requiring that appraisers and umpires also be a licensed adjuster, public adjuster, engineer, architect, or an individual with occupational experience or training in constructing, repairing, or estimating the relevant type of loss.
This rule addresses a real problem. Umpire appointments of individuals who lack the qualifications necessary to fairly evaluate property losses on the merits have been an increasing concern. Having minimum standards, even if imperfect, is better than none.
A Deadline for Insurers to Demand Appraisal After Suit Is Filed
Under the proposed rules, if a lawsuit is filed, the responding party (usually the insurer) has 30 days from the date the lawsuit is filed to demand appraisal. This deadline applies even if the one-year window to demand appraisal during the adjustment of the claim has already expired.
This is a meaningful check on conduct that has become increasingly common in the wake of the Texas Supreme Court’s decision in Rodriguez v. Safeco Insurance Company of Indiana, 684 S.W. 3d 789 (Tex. 2024). In Rodriguez, Safeco filed a motion to compel appraisal after substantial time and expense were expended conducting discovery during the lawsuit, and mediation was unsuccessful. That decision held that an insurer’s full payment of an appraisal award—plus any possible statutory interest—precluded the recovery of attorney’s fees under Chapter 542A of the Texas Insurance Code.
Armed with Rodriguez, some insurers have participated in litigation for months—running up discovery costs and forcing policyholders to incur unnecessary expenses—only to invoke appraisal late in the case as an exit ramp, leaving policyholders to absorb the litigation expense with no realistic prospect of recovering fees. The 30-day post-suit deadline imposes a reasonable limit on that strategy. Notably, the proposed rules do not prevent parties from mutually agreeing to proceed to appraisal at a later time.
The Concerns: Where the Rules Fall Short
The One-Year Trigger and the Coverage Denial Gap
The one-year deadline for residential property policyholders to demand appraisal is measured from the date the insurer provides its notice of acceptance or rejection of the claim under Tex. Ins. Code § 542.056. That sounds reasonable in the abstract. In practice, it raises serious concerns.
What happens when the insurer’s coverage position changes? Does the one-year clock reset every time the insurer changes its mind? What happens when the insurer fails to make a written coverage decision? Yes, this does occasionally happen. Would the lack of a written acceptance or rejection of the claim mean the one-year clock never starts? The proposed rules do not say.
I believe the one-year clock should begin at a more concrete point in time, leaving less room for reasonable people to disagree. The deadline for an insurer to accept or reject a claim in writing is part of the Texas Prompt Payment of Claims Act (Tex. Ins. Code §§ 542.055–542.060), which establishes deadlines for an insurer to acknowledge, investigate, and accept or reject a claim. Whether insurers routinely comply with those deadlines is, frankly, another conversation for another day. But tethering the appraisal deadline to an insurer action—specifically, the insurer’s coverage decision—creates a structural problem, or ambiguity when the insurer’s decision changes. An insurer’s own delay or inaction could render the one-year deadline largely meaningless.
A cleaner approach would tie the appraisal demand deadline to the date the policyholder provides the insurer with notice of the loss.
Appraisal for All Total Losses—A Conflict with the Valued Policy Law
The proposed rules require that appraisal be available for both partial and total losses. For most claims, that is appropriate and sensible. But the rules do not account for an important exception under Texas law: the Valued Policy Law.
Under Texas Insurance Code § 862.053, a fire insurance policy must be treated as a liquidated demand against the company for the full amount of the policy in the event of a total loss by fire to an insured structure. See generally Aetna Ins. Co. v. Shacklett, 57 S.W. 583 (Tex. App. 1900, no writ); Export Ins. Co. of New York v. Axe, 58 S.W.2d 39 (Tex. Comm’n App. 1933). When the statute makes policy limits the automatic measure of loss, there is no “amount of loss in dispute” for the appraisal process to determine—the Legislature has already answered that question.
Mandating appraisal for all total losses without addressing the Valued Policy Law creates a potential collision: it would require a process designed to determine the amount of loss in situations where the law has already fixed that amount as a matter of statute. It is worth noting that Section 862.053 does not apply to personal property, so this concern applies only to total losses involving insured structures. TDI should consider a clarifying carve-out before finalizing these rules.
What This Means for Texas Policyholders
The proposed rules apply to personal automobile and residential property insurance policies delivered, issued, or renewed on or after September 1, 2026. They do not apply to Texas Windstorm Insurance Association policies or commercial insurance policies.
TDI is accepting written comments through June 8, 2026, and a public hearing is set for June 2, 2026, at the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin, Texas 78701 (and available virtually). These rules carry real consequences, and the comment period is a genuine opportunity to advocate for the clarifications and fixes the rules need before they are finalized.
The overall arc of these proposed rules bends toward clarity for both insurers and policyholders. More transparency, clearer deadlines, meaningful qualifications for appraisers and umpires, and a mandatory appraisal right that cannot be conditioned on reaching an impasse. These are things the Texas insurance community has needed for years. The gaps identified above should be addressed before September 1, 2026.
