The Texas Department of Insurance issued long-awaited new rules governing residential and automobile appraisal pursuant to the Commissioner’s Order Number 2026-10210. The Order created several new sections of the Texas Administrative Code, §§5.9800 to 5.9806.
The history of the rulemaking as well as the new rules are available in this link: https://www.tdi.texas.gov/rules/2026/documents/202610210.pdf
Several important features of the new rules stand out:
- The new rules govern personal automobile and residential property insurance policies delivered, issued for delivery, or renewed on or after March 1, 2027.
- The new rules do not apply to commercial policies or policies issued by the Texas Windstorm Insurance Association.
- Insurance policies subject to the new rules must contain a new appraisal provision. The provision must specify that either party can unilaterally demand appraisal without waiting for an impasse. The provision also codifies some common law regarding appraisal. For example, appraisal is only for disputes over the amount of loss, and appraisal awards will be binding except where the award was made without authority, not in substantial compliance with the policy, or in the case of fraud, accident, or mistake.
- The new rules set minimum qualifications for appraisers and umpires. For example, adjusters, architects, and engineers can be appraisers and umpires if they have relevant experience in residential claims and construction. The appraisers and umpires must also be independent and disinterested.
- The new rules set time limits for demanding appraisal and completing appraisal. For example, in residential claims, with some exceptions, an appraisal demand must be made not later than the expiration of the limitations period for filing suit under the policy. An insurer that wants appraisal must demand it within 60 days of receiving presuit notice under Texas Insurance Code §542A.003. With a few exceptions, an insured cannot demand appraisal after filing a lawsuit. The deadline for completing appraisal is 240 days after the appraisal demand was made, but the parties can modify the deadlines by agreement.
- Umpires can be appointed by local courts or “independent vendor that offers umpire selection services.” Notice of a request for an umpire’s appointment must be given to the other party. If an award is not made by the deadline, the umpire’s engagement is terminated, and a new umpire must be appointed within 15 days.
The new rules reflect some progress in improving appraisal, but notably absent are strong ethics rules for appraisers and umpires, limits on umpires’ fees, and more protections for procedural due process. These are concerns that deserve further attention. Appraisal in commercial claims also deserves attention. In addition, some deadlines in the new rules are keyed to presuit notice under Texas Insurance Code §542A.003 concerning claims of property damage by forces of nature. The plain language of the new rules indicates that the deadlines do not apply where presuit notice is provided under Texas Insurance Code §541 or the DTPA.