The Ultimate Guide to Insurance Appraisal in Texas
How Texas policy language and case law divide amount-of-loss questions from coverage, with practical context on appraisal awards and professional selection.
Written by
Sarah PatchCo-Founder and Insurance Appraisal Writer
20 years across construction, design, and insurance-related work, including experience serving as an appraiser.
Legal Authority for Insurance Appraisal in Texas
Three separate legal sources now govern insurance appraisal in Texas: a new statutory framework created in 2025, longstanding case law and policy language, and administrative rules from the state regulator. Each plays a distinct role, and the lines between them determine how appraisals are initiated, conducted, and enforced.
⚠️ Note
As of publication, TDI's implementing rules for Chapter 1813 are in the formal rulemaking process. Specific timelines, qualifications, and procedural requirements cited in this guide are based on TDI's September 2025 informal working draft and may differ in the final adopted rules. Practitioners should verify current rules at tdi.texas.gov.
Chapter 1813 — The Foundation
For more than a century, Texas appraisal law existed almost entirely in the realm of contract and common law. There was no comprehensive statutory scheme governing the process. Instead, appraisal was dictated by the language of the insurance policy and shaped by judicial decisions dating back to Scottish Union & National Insurance Co. v. Clancy (1888), which firmly established appraisal as an enforceable contractual mechanism in Texas.
That changed with the passage of SB 458. By enacting Chapter 1813 of the Texas Insurance Code, the Texas Legislature formally codified appraisal procedures for the first time, creating a mandatory statutory framework that now governs residential property and personal automobile policies. While commercial policies remain largely subject to contract and common law principles, personal lines appraisal in Texas now operates within an express legislative structure.
SB 458 (2025) — The Update
Senate Bill 458, enacted in 2025, created Chapter 1813 of the Texas Insurance Code. The bill emerged amid concerns that certain insurers had begun limiting or eliminating appraisal provisions in personal lines policies, particularly in the years following major catastrophe losses. Historically, appraisal has served as the principal contractual method for resolving disputes over the amount of loss without resorting to litigation. Chapter 1813 codifies appraisal requirements for residential property and personal auto policies, ensuring the continued availability of that dispute-resolution mechanism.
The bill made appraisal mandatory. Every personal automobile and residential property insurance policy issued or renewed in Texas after January 1, 2026, must now contain an appraisal provision. The mandate covers stock companies, mutual companies, county mutuals, Lloyd's plans, reciprocal exchanges, farm mutuals, surplus lines insurers (when Texas is the home state), and the FAIR Plan Association.
Chapter 1813 codified several areas that had previously depended entirely on common law or policy language: specific timelines and deadlines for demands, appraiser selection, and award completion; tolling rules for certain circumstances; authorization for electronic notices and documentation; procedural requirements for appraisers and umpires; and alignment with TDI regulations.
Accuracy Note
The appraisal process itself has existed for over a century through standard policy language and common law, but Chapter 1813 is the first dedicated statutory framework.
"If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, disinterested appraiser. Each shall notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire. The appraisers shall then set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon shall be the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreements signed by any two of these three shall set the amount of the loss."
💡 In Plain Terms
When the insurer and the policyholder cannot agree on the dollar value of a covered loss, either side can trigger appraisal with a written demand. Each side selects their own appraiser. Those two appraisers choose a neutral umpire. If any two of the three agree on a number, that figure becomes the binding award — subject only to challenge on grounds of fraud, accident, material mistake, or if the award was made without authority.
Title 28 TAC — TDI Administrative Rules
The Texas Department of Insurance administers appraisal procedures through Title 28 of the Texas Administrative Code. These rules supply the procedural detail that the statute leaves open: notification requirements for appraiser and umpire selections, specific timelines for selection, inspections, and final award submission, minimum qualification standards for appraisers and umpires, and TDI's authority to step in when parties fail to select an umpire or miss deadlines.
Appraisal's scope, by statute, is narrow. It addresses a single question: how much is the damage worth? It does not determine whether the loss is covered, does not interpret policy language, and does not adjudicate disputes about the carrier's claims handling. Those questions belong to the courts.
What Is TWIA?
The Texas Windstorm Insurance Association serves as the insurer of last resort for windstorm and hail damage along the Texas Gulf Coast. Most private carriers refuse to write wind coverage in the 14 coastal counties and portions of Harris County that the state has designated as catastrophe areas. For property owners in Galveston, Corpus Christi, and other locations within the designated catastrophe area, TWIA is often the only available source of wind and hail coverage.
TWIA is not a private insurance company. It operates as a state-created residual market mechanism, funded by policyholder premiums and supported by post-event bonding authority. Insurance Code Chapter 2210 governs TWIA — a separate statutory framework from the Chapter 1813 rules that apply to private-market insurance appraisals.
TWIA Appraisal — How It Differs
Insurance Code Chapter 2210, Subchapter H, §2210.574 governs TWIA appraisal. The process is mandatory for covered losses. Either party may demand it. Each side selects an appraiser, and if the two appraisers cannot agree on an umpire, TDI has the authority to appoint one directly from its maintained roster — a power the department does not hold in private-market disputes.
⚠️ TWIA vs. Private-Market Appraisal
The mechanics look similar — demand, appraiser selection, umpire, binding award — but the governing statute (Chapter 2210 vs. Chapter 1813), the regulator's intervention authority, and the umpire selection process are all different. SB 458 does not apply to TWIA. TWIA claims follow Chapter 2210 exclusively.
Texas Department of Insurance (TDI)
TDI regulates the insurance industry in Texas, including the appraisal process. SB 458 directed the department to adopt rules governing appraisal timelines, appraiser and umpire qualifications, and conflict-of-interest standards. TDI also maintains umpire rosters for TWIA claims and processes consumer complaints related to property insurance disputes.
Appraisal vs. Arbitration in Texas
The terms are frequently used interchangeably. Texas law treats them as fundamentally different processes. The Texas Supreme Court drew the line in In re Allstate County Mutual Insurance Co., 85 S.W.3d 193 (Tex. 2002), holding that an appraisal clause is not an arbitration agreement.
| Feature | Appraisal | Arbitration |
|---|---|---|
| What It Decides | Amount of loss only | Everything — coverage, liability, damages, policy interpretation |
| Who Decides | Two appraisers + one umpire (any 2 of 3 agree) | One or more arbitrators acting as quasi-judges |
| Governing Law | Common-law principles; not the FAA or Texas GAA | Federal Arbitration Act or Texas General Arbitration Act |
| Binding? | Yes — on the amount of loss. TPPCA claims may survive. | Yes — on all issues submitted. Replaces court process entirely. |
| Challenge Standard | Fraud, accident, material mistake, or without authority | FAA statutory grounds (§10) — corruption, partiality, misconduct |
The binding nature of the appraisal award extends only to the dollar amount. Separate causes of action — including claims under the Prompt Payment of Claims Act (Chapter 542) — may survive the appraisal under Barbara Technologies (2019). However, under Ortiz v. State Farm Lloyds (2019), breach-of-contract claims and common-law or statutory bad faith claims are generally barred once the insurer pays the appraisal award, unless the policyholder can demonstrate an independent injury beyond the policy benefits.
Can Appraisers Determine Causation?
No question in Texas insurance appraisal law has generated more litigation. Nearly two decades of case development have produced an answer, but it sits in a gray area that neither policyholders nor carriers fully control.
Before 2009, the boundary was clear. Appraisers determined the amount of loss. Causation — what caused the damage and whether that cause fell within the policy — belonged to the courts.
That changed with State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009). A hailstorm hit Plano. State Farm estimated $499 in roof damage. The homeowner's contractor put the figure above $13,000. State Farm refused appraisal, characterizing the dispute as one of causation rather than amount. The Texas Supreme Court disagreed and compelled appraisal, reasoning that the disagreement over how many shingles sustained hail damage was fundamentally a question about the extent of loss.
The decisions that followed Johnson have generally allowed appraisers to allocate damage between covered and excluded causes — separating hail from pre-existing wear, wind from settling. What appraisers cannot do is determine whether a given cause is covered under the policy as a matter of legal interpretation.
What Appraisal Covers — and What It Does Not
The scope limits are straightforward. Appraisal addresses the amount of loss for covered property — replacement cost or actual cash value, depending on the policy terms. It does not address coverage disputes, liability or third-party claims, or punitive or extra-contractual damages.
⚖️ The Practical Line
Appraisers can separate damage caused by a covered event from pre-existing conditions or excluded perils. They cannot determine whether the policy covers that event in the first place. When causation is disputed, structuring the award to quantify damage from each potential cause separately — and leaving the coverage determination to the courts — produces the outcome most likely to withstand challenge from either side.
Panel Composition
Every Texas insurance appraisal panel consists of three people. Each party selects one appraiser. The two appraisers together select the umpire. The panel's authority is limited to a single determination: the amount of loss.
Policyholder's Appraiser
Selected by the insured. Must be competent and disinterested.
Carrier's Appraiser
Selected by the insurer. Must be competent and disinterested.
Umpire
Neutral tiebreaker. Must be competent and impartial. Agreement by any two of three sets the award.
Texas insurance appraisal panel composition — two party-selected appraisers and one jointly selected umpire
Qualifications carry weight. Under TDI's rules, "competent" means relevant professional expertise — engineers, architects, licensed adjusters, public adjusters, and other professionals with experience in building construction and property damage estimation all meet the standard. "Disinterested" requires no financial stake in the outcome beyond the professional fee. "Impartial" — the standard applied to the umpire — demands genuine neutrality, with no undisclosed ties to either party.
Appraiser and Umpire Qualifications in Texas
TDI's adopted rules under Title 28 TAC §§5.4211–5.4214 define who can serve on a TWIA insurance appraisal panel. The rules establish separate qualification tracks for appraisers and umpires, with the umpire pool including two additional categories — licensed attorneys and current or former judges.
Must be one of the following (§5.4212)
Must be one of the following (§5.4214)
Additional umpire-only categories
Preferred (not required)
Conflicts of Interest
TDI's rules draw a distinction between "potential conflicts" and "disqualifying conflicts." Both appraisers and umpires must disclose potential conflicts to both parties no later than five days after being hired — and before beginning any work on the appraisal.
The categories are specific. Under §5.4212 and §5.4214, the following relationships create conflicts:
Employment ties — Current or former employee of the association or claimant, or employee of a contractor working for either party
Family relationships — Related within a degree described by Government Code §573.002 to any current or former employee, contractor, or representative of either party
Policyholder status — Currently holds a policy with the association or has previously filed a claim
Open claims — Has an open claim with the association, or acts as a representative or public adjuster on an open claim
Litigation history — Party to or representative of a party in current or recent (within five years) litigation with the association
Prior involvement in the claim — Adjusted the loss, acted as public adjuster on the loss, or is related to the adjuster or public adjuster who handled the claim
Insurance industry employment — Current employee or contractor of an insurance company or public insurance adjusting company
Catch-all — Any other direct or indirect interest, financial or otherwise, that substantially conflicts with the appraiser's or umpire's duties
For umpires, certain conflicts are not merely disclosable — they are disqualifying. The distinction matters: an appraiser with a potential conflict may still serve after disclosure, but an umpire with a disqualifying conflict cannot serve at all.
Regulatory source: The qualification, conflict, and obligation standards described here are drawn from TDI's adopted rules at Title 28 TAC §§5.4211–5.4214. These rules apply directly to TWIA claims. TDI's implementing rules for private-market appraisals under Chapter 1813 had not been formally adopted as of publication — the proposed rules follow a similar framework, but the final version may differ.
Step by step
The Texas Insurance Appraisal Process
Insurance appraisal in Texas follows a six-step sequence. The broad strokes are consistent across policies, though specific timelines and procedural details vary by insurer and clause language. SB 458 standardized the framework for residential property and personal auto policies beginning January 1, 2026.
The Texas insurance appraisal process — 6 steps from written demand to binding award under Chapter 1813 as amended by SB 458
How to Demand Appraisal
The process begins with a written demand. Either the policyholder or the carrier may initiate it. Verbal requests are insufficient. There is no prescribed form — a clear letter or email identifying the policy number, the claim, the date of loss, and a statement invoking the appraisal clause satisfies the requirement.
Timing rules tightened under SB 458. Under TDI's proposed implementing rules for residential property claims, the demand must be made within one year from the date the insurer gives notice accepting coverage. For personal auto claims, the proposed deadline is 120 days.
The Appraisal Process
Following the demand, each party selects an appraiser and notifies the other side. Under the standard HO-3 policy clause, the notification period is 20 days. TDI's proposed implementing rules extend this to 30 days. Each appraiser inspects the property independently or with a joint inspection, reviews documentation, and prepares an estimate. If both agree on a number, they submit a written report and that figure becomes the binding award. If the appraisers cannot reach a consensus, they submit their differences to the umpire. The final award requires written agreement by any two of the three panel members.
Each party pays for its own appraiser. The umpire's fee is typically split equally. Under TDI's proposed implementing rules, when an umpire is involved, the award must be issued within 180 days of the umpire's selection.
How Umpires Are Selected
Umpire selection is where many Texas appraisals stall. The two appraisers bear responsibility for choosing the umpire, who must be "competent" and "impartial." When the appraisers cannot agree — a common outcome — either party may petition the court to appoint an umpire. Under SB 458, umpires must meet qualification standards and disclose any conflicts of interest within five days.
Umpire impartiality carries consequences beyond the immediate dispute. An umpire who fails to disclose a material conflict renders the award vulnerable — regardless of which side the award favored.
Obligations
Duties and Deadlines
Once the appraisal process begins, both the policyholder and the appraiser carry specific obligations. Failure to meet them can delay proceedings, undermine the resulting award, or create grounds for challenge after the fact.
Tolling of Deadlines
SB 458 introduced specific tolling provisions — mechanisms for pausing the running of deadlines when compliance becomes impractical. Deadlines may be tolled by mutual written agreement of the parties, while an appraiser or umpire selection dispute is pending before a court, or when unforeseen events such as storms or natural disasters prevent compliance.
Appraisal Award and Enforcement
The appraisal award must be signed by the appraisers and, when the umpire participated, by the umpire as well. It is binding on the amount of loss. The insurer is obligated to pay the award amount, less any applicable deductible, in accordance with the policy terms.
Is Insurance Appraisal Binding in Texas?
Yes — on the amount of loss, provided the process was properly conducted. That principle has been settled in Texas law since Scottish Union & National Insurance Co. v. Clancy (1888). Courts will disturb an award only upon a showing of fraud, accident, or material mistake — or if the award was made without authority.
Under Garcia v. State Farm Lloyds (2016), a properly paid appraisal award may preclude breach-of-contract claims based solely on the amount of loss. But in Barbara Technologies v. State Farm Lloyds (2019), the Court drew an important boundary: the award is not an admission of liability. Claims under the Prompt Payment of Claims Act may proceed even after the carrier pays the appraised amount.
Legal precedent
Key Texas Case Law on Insurance Appraisal
Seven decisions have shaped the modern Texas appraisal framework. They span more than 130 years of jurisprudence — from the earliest enforcement of appraisal clauses through the contemporary debates over causation, award finality, and the survival of statutory claims after an award is paid.
Key milestones in Texas insurance appraisal law — from the first enforcement in 1888 through statutory codification in 2025
Scottish Union & National Insurance Co. v. Clancy
Tex. 1888
The earliest significant Texas decision enforcing an appraisal clause in an insurance policy. The court upheld the binding nature of the appraisal process, establishing the legal foundation that has supported more than a century of Texas appraisal jurisprudence.
In re Allstate County Mutual Insurance Co.
85 S.W.3d 193 (Tex. 2002)
The Texas Supreme Court held that an appraisal provision is not an agreement to arbitrate. Appraisal determines only the amount of loss, while arbitration can resolve all issues between the parties.
State Farm Lloyds v. Johnson
290 S.W.3d 886 (Tex. 2009)
The Court held that a dispute over the extent of hail damage was a question about the amount of loss — not a causation dispute requiring court resolution. Appraisers may need to 'consider causation' when determining the amount of loss.
TMM Investments, Ltd. v. Ohio Casualty Insurance Co.
730 F.3d 466 (5th Cir. 2013)
An appraisal award carries a strong presumption of validity. The burden of overturning an award falls on the challenging party, who must demonstrate fraud, accident, or mistake.
Garcia v. State Farm Lloyds
514 S.W.3d 257 (Tex. App.—San Antonio 2016)
When an insurer pays a properly conducted appraisal award, the policyholder's breach-of-contract claim based solely on underpayment effectively collapses.
Barbara Technologies Corp. v. State Farm Lloyds
Tex. 2019
An appraisal award does not constitute an admission of liability. Statutory claims under Chapter 541 and the Prompt Payment of Claims Act survive the appraisal process.
Biasatti / TopDog Properties v. GuideOne
Tex. 2020
A unilateral appraisal clause — one that only the insurer could invoke — does not bar the insured from pursuing extra-contractual or statutory claims.
Reference
Resources & Primary Sources
The primary legal and regulatory sources referenced throughout this guide. All links point to official government sites, court databases, or established legal research platforms.
Find a professional
Where to Find a Qualified Appraiser or Umpire
The quality of the appraiser or umpire shapes the quality of the outcome. An appraiser with relevant experience — in the type of loss, the type of construction, the local market — produces estimates that hold up under scrutiny. An umpire who is genuinely independent and understands the scope of authority produces awards that both sides can live with, even when neither gets exactly what it wanted.
Texas does not maintain a statewide public directory of qualified insurance appraisers, and the TDI umpire roster applies only to TWIA claims. Traditionally, homeowners and contractors have relied on referrals, industry associations, or scattered directories to locate appraisers. InsuranceAppraisal.com provides a centralized, publicly accessible directory of qualified insurance appraisers across Texas, making it easier to find professionals for any property claim.
Search the InsuranceAppraisal.com Directory
Qualified appraisers and umpires in Texas — searchable by location, specialty, and experience. The directory serves policyholder representatives, carrier representatives, and neutral umpires.
Find an Appraiser or UmpireTexas Department of Insurance
State regulatory authority for insurance in Texas
Austin, TX 78701
Frequently Asked Questions
Yes. When properly conducted, the appraisal award is binding on both the policyholder and the insurer as to the amount of loss. Under Chapter 1813, the award can only be overturned on grounds of fraud, accident, material mistake, or if the award was made without authority. Coverage disputes remain outside the scope of appraisal.
Appraisal determines only the amount of loss — the dollar value of the damage. Arbitration can decide all issues including coverage, liability, and policy interpretation. The Texas Supreme Court confirmed in In re Allstate County Mutual Insurance Co. (2002) that an appraisal clause is not an arbitration agreement and is not governed by the Federal Arbitration Act.
Partially. Since State Farm Lloyds v. Johnson (2009), Texas courts have recognized that appraisers may need to "consider causation" when assessing the amount of loss from a specific covered event. Appraisers can allocate damage between covered and excluded causes, but cannot make coverage determinations as a matter of legal interpretation.
Under TDI's proposed implementing rules for SB 458, for residential property claims, the demand must be made within one year from the date the insurer gives notice accepting coverage. For personal auto claims, the proposed deadline is 120 days. These rules were in the formal adoption process as of early 2026.
The Texas Windstorm Insurance Association (TWIA) provides insurance for windstorm and hail losses along the Texas Gulf Coast. TWIA appraisal is governed by Insurance Code Chapter 2210, Subchapter H, §2210.574. The appraisal process is mandatory for covered losses, and the award is binding under statute. TDI maintains an umpire roster specifically for TWIA claims.
Under TDI rules (Title 28 TAC §§5.4212, 5.4214), appraisers must be an engineer or architect with building construction experience, an adjuster or public adjuster with property damage estimating experience, or a general contractor with construction or estimating experience. Umpires must meet the same base qualifications or be a licensed attorney or a current or former judge of a Texas court of record. Both must disclose conflicts of interest within five days of being hired.
Sources & Citations
- 1Texas Insurance Code Chapter 1813, Texas Legislature.
- 2Title 28 TAC — TDI Administrative Rules, Texas Secretary of State.
- 3State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), Justia.
- 4Barbara Technologies Corp. v. State Farm Lloyds (Tex. 2019), Justia.
- 5TWIA Claims & Appraisal, Texas Windstorm Insurance Association.
- 6TDI Informal Working Appraisal Draft, Texas Department of Insurance.
Disclaimer
This guide is for informational purposes only and does not constitute legal advice. Insurance appraisal laws change frequently. While we make every effort to keep this information current, we recommend consulting with a licensed attorney, public adjuster, or claims professional in the relevant state for advice specific to your situation. Last updated: February 2026.
