Texas Regulates Right to Appraisal for Property Insurance

The Texas Department of Insurance (TDI) has released proposed regulations to implement the right to appraisal (RTA) legislation, reflecting Senate Bill 458 enacted last year. This legislation requires property insurance policies in Texas to include an appraisal clause, with TDI tasked to establish enforcing rules. Robert McDorman, General Manager of Auto Claims Specialists, praised these regulations as a substantial benefit for insured Texans.

The proposed rules mandate that insurers must inform policyholders of the appraisal process when a claim is accepted or denied. Insights from the TDI’s 2024 Appraisal Experience Data Call Report indicate low demand for appraisals, suggesting unfamiliarity among policyholders regarding the appraisal process. Notifications must delineate where the appraisal clause is in the policy, procedural details for demanding an appraisal, and obligations of both policyholders and insurers.

McDorman emphasized that the regulations allow either party to independently request an appraisal, eliminating previous requirements for mutual consent. This ensures the regulation aligns with the legislature's intent. The rules specify qualifications for appraisers and umpires, requiring expertise tailored to the loss type, impartiality, and independence.

TDI will host a public hearing on June 2 at the Barbara Jordan State Office Building in Austin to solicit feedback on the proposals, available in person and via Zoom. Written comments are open until June 8. Additionally, the Washington Office of the Insurance Commissioner (OIC) has also introduced a draft to register appraisal umpires, following similar RTA legislation.