Texas Senate Advances Right to Appraisal Bill for Auto and Home Insurance

The Texas Senate has nearly unanimously approved a right to appraisal bill, SB 458, which is now under consideration by the House Insurance Committee. The legislation mandates the inclusion of appraisal clauses in all Texas auto and home insurance policies, establishing a formal dispute resolution process specifically to determine the amount of loss in claims disagreements between insurers and policyholders. This bill follows years of advocacy by insurers, repair associations, and consumer groups to standardize appraisal procedures in insurance contracts.

Data from the Texas Department of Insurance shows appraisal is currently used in less than 0.02% of payable personal auto claims. However, when appraisal is invoked, awards are frequently significantly higher than initial insurer offers; a 2023 analysis by Texas Watch found appraisal outcomes averaging 40% above insurer settlement offers. These findings highlight the potential financial impact of expanding appraisal provisions in insurance policies.

SB 458 assigns the Texas Department of Insurance the role of overseeing the qualifications of appraisers and umpires and gives the agency authority to regulate the appraisal process. Proponents argue that reinstating mandatory appraisal clauses, which were common until about a decade ago, will provide a more efficient and less costly alternative to litigation, facilitating quicker resolutions for claimants to repair vehicles or restore homes.

Key stakeholders, including the Insurance Council of Texas and Texas Watch, have expressed support for the bill, describing it as balanced and reflective of industry and consumer interests. While a companion bill, SB 369, is also under consideration, it has yet to receive a hearing. The bill’s progress indicates a significant shift toward formalizing dispute resolution in Texas insurance claims, with potential implications for regulatory oversight and claims handling practices in the auto and homeowners insurance markets.