Texas Mandates Independent Appraisal Clause in Auto Insurance Policies by Sept 2025

Texas has enacted a new law, effective September 1, mandating the inclusion of an independent appraisal clause in all personal auto insurance policies. This provision allows either the insured or the insurer to invoke an independent appraisal when there is a dispute over the amount of loss, ensuring impartial resolution without resorting to litigation. The legislation, Senate Bill 458, was unanimously passed by the Texas Legislature following sustained advocacy from industry stakeholders, including the Auto Body Association of Texas and Auto Claim Specialists. This law addresses concerns arising from insurers, such as State Farm, removing appraisal clauses from policies, which previously left consumers vulnerable in loss valuation disputes.

The right to independent appraisal provides significant benefits by enabling claims to be evaluated based on original equipment manufacturer (OEM) repair standards. This process helps prevent unsafe repairs and reduces the financial burden on policyholders who might otherwise have to pay out-of-pocket expenses or engage in costly lawsuits. The law also reflects broader trends in U.S. states, with similar appraisal rights legislation being debated or enacted in New Jersey, Rhode Island, Oregon, and Washington. Advocacy efforts included testimony, collaboration among repair professionals, consumer advocates, and regulatory bodies such as the Texas Department of Insurance (TDI).

The new statute is expected to improve transparency and fairness in the insurance claims process by balancing the interests of insurers and insureds. It also supports collision repair businesses by confirming the role of qualified repair professionals in loss valuation. Enforcement and implementation guidelines will be refined in partnership with TDI to ensure smooth operation. The law’s passage marks a notable shift in consumer protection and regulatory compliance in Texas auto insurance, signaling increased attention to dispute resolution mechanisms within the sector.