News Summary
Texas has enacted a new law that will change the way disputes over home and auto insurance claims are resolved. Senate Bill 458 introduces a binding appraisal process starting January 1, requiring insurers to follow a streamlined method for determining claim amounts. This law applies to personal auto and residential property policies but excludes commercial policies. The goal is to simplify dispute resolution, enhance consumer protection, and address long-standing frustrations for policyholders when claims are contested.
Texas will implement a new law starting January 1, 2026, requiring insurers to resolve personal auto and home loss disputes through a binding appraisal process. Known as Senate Bill 458 (S.B. 458), the legislation was passed unanimously by the Texas legislature and will fundamentally change the manner in which insurance companies and policyholders resolve disputes over loss amounts.
Under this new law, insurance companies will be mandated to conduct appraisals whenever there is a disagreement regarding the amount of loss, without any possibility of avoidance or delay. These appraisals are to be binding unless there is evidence of fraud or substantial errors. The legislation applies to all personal auto and residential property insurance policies that are either issued or renewed in Texas after the designated start date.
S.B. 458 covers a wide range of insurer types, including capital stock, mutual companies, surplus lines, and the FAIR Plan. However, it does not apply to commercial insurance policies or the Texas Windstorm Insurance Association (TWIA). Every pertinent policy will be required to include appraisal clauses that are compliant with the new mandates, ensuring that when contested damages arise, the appraisal process is obligatory.
The appraisal process will involve both parties selecting their own appraisers. If these appraisers cannot agree on the amount of loss, they will then select a neutral umpire. Once two out of the three appraisers reach an agreement, that determined figure will be considered binding. The Texas Department of Insurance (TDI) will outline the rules for appraisal duration, the qualifications for appraisers and umpires, and the specific conditions under which appraisals must take place, particularly in cases of total loss.
The implementation of S.B. 458 seeks to address the frequent disputes in Texas that typically arise from storms, hail damage, and accidents involving vehicles. By clarifying how insurers handle contested claims, the new law aims to streamline the resolution process for consumers, making it faster and easier to navigate.
To align with these new stipulations, insurance carriers will need to allocate time for amending their policies, which includes modifying forms and providing necessary training for staff. The push for a binding appraisal process in Texas has been ongoing for nearly ten years, with significant efforts contributing to its success. One key advocate in the movement was Robert McDorman, the founder of Auto Claim Specialists, who played an important role in championing the cause.
The Auto Body Association of Texas (ABAT) contributed to the advocacy for this legislation, collaborating with consumer advocacy groups such as Texas Watch to bring attention to the need for these consumer protections. This legislative effort has a historical context dating back to 2015 when State Farm, one of the major insurers, removed the appraisal clause from its policies in Texas. Despite previous efforts facing challenges during legislative sessions in 2021 and 2023, continued advocacy ensured the issue remained a priority.
This recent law was expedited through the legislative process, securing unanimous approval from both the Texas Senate and House. Concerns regarding the restrictions on appraisal processes in insurer policy forms were voiced by the Office of Public Insurance Counsel (OPIC), emphasizing the need for consumer safeguards regarding appraisal rights. In support of mandatory appraisal rights, individual policyholders have also contributed their advocacy efforts, with one benefiting from the appraisal process even donating their settlement to help fund further advocacy.
The Texas appraisal legislation aligns with similar initiatives in states like New Jersey, Rhode Island, Oregon, and Washington, which also aim to enhance consumer protections in the insurance arena. This new law is anticipated to mitigate costly legal battles and help ensure that unsafe vehicles are kept off Texas roads. It guarantees that either party engaged in a dispute over lost amounts may invoke the appraisal process, thus ensuring that the determination of repair costs will be made by independent appraisers based on established manufacturer guidelines.
The culmination of efforts from public adjusters, lobbyists, and various organizations has strengthened the consumer’s right to a compulsory appraisal, thereby solidifying a significant victory for consumer rights within Texas insurance policies.
Deeper Dive: News & Info About This Topic
- Repairer Driven News: Texas Mandatory Right to Appraisal Now Law Effective Sept 1
- Insurance Business Magazine: Texas Forces Insurers to Resolve Home Auto Loss Disputes Fast
- Auto Body News: Throwing Stones to Take Down a Giant: Texas Right to Appraisal Now Law
- Wikipedia: Appraisal
- Encyclopedia Britannica: Appraisal
Author: STAFF HERE GEORGETOWN
GEORGETOWN STAFF WRITER The GEORGETOWN STAFF WRITER represents the experienced team at HEREgeorgetown.com, your go-to source for actionable local news and information in Georgetown, Williamson County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Red Poppy Festival, Georgetown Swirl, and Christmas Stroll. Our coverage extends to key organizations like the Georgetown Chamber of Commerce and the Downtown Georgetown Association, plus leading businesses in manufacturing and tourism that power the local economy such as local wineries and historic downtown shops. As part of the broader HERE network, including HEREaustin.com, HEREcollegestation.com, HEREdallas.com, HEREhouston.com, HEREgeorgetown.com, and HEREsanantonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
