Texas’s New Appraisal Rules: What They Mean for Residential Property, Commercial Property, and Automobile Claims

Introduction

On November 6, 2026, the Texas Commissioner of Insurance adopted new 28 TAC §§5.9800–5.9806, a new Division 4 of Chapter 5, Subchapter Q, governing appraisal of disputed property and automobile losses. The rules implement Senate Bill 458 (89th Legislature, 2025), which added Insurance Code Chapter 1813 (Appraisal of Disputed Losses) and requires certain insurers writing personal automobile or residential property insurance in Texas to include a compliant appraisal provision in their policies. Chapter 1813 describes appraisal as a dispute resolution process “solely to determine the amount of loss when that amount is in dispute between the policyholder and the insurer.”

This article explains how the rules apply to residential property claims, which they regulate in detail; to commercial property claims, which they expressly exclude; and to personal automobile losses, which follow a parallel but faster process. It also flags practical issues for policyholders, insurers, and litigators handling first-party disputes.

Effective Date and Transition

TDI proposed a September 1, 2026, compliance date but extended it in response to comments. The rules apply to covered policies delivered, issued for delivery, or renewed on or after March 1, 2027. For policies delivered, issued for delivery, or renewed before that date, TDI states that the policy’s own appraisal provision controls and is not subject to the new rules. So, on any claim, the threshold question is the issuance or renewal date of the policy in force at the time of loss.

Part I: Residential Property Claims

1. Which Policies Are Covered

“Residential property insurance” is defined as coverage against loss to tangible personal property or to residential real property at a fixed location provided through a homeowners policy, including a tenant’s policy, a condominium owners policy, or a residential fire and allied lines policy (§5.9801(7)). Texas Windstorm Insurance Association policies are excluded (§5.9800(c)(1)).

2. Mandatory Features of Every Appraisal Provision

Section 5.9802 requires every covered appraisal provision to:

• state that either party has the right to unilaterally demand appraisal;
• not require the parties to reach an impasse before appraisal can be demanded;
• apply to disputes over the amount of loss, both partial and total, except a total loss of real property by fire subject to Insurance Code §862.053(a);
• make the award binding as to the amount of loss unless it was made without authority, was not made in substantial compliance with the appraisal provision, or there was fraud, accident, or material mistake relevant to the appraisal;
• state the deadlines and process for appraisal, including the specific time periods in §5.9805; and
• not conflict with Division 4 or other Texas law.

The impasse prohibition is likely to draw the most attention in litigation. Commenters relied on In re Acceptance Indemnity Insurance Co., 562 S.W.3d 645, 650 (Tex. App.—San Antonio 2018, no pet.), for the view that appraisal is a last resort that is available only after good-faith negotiations break down. TDI rejected that view. It found that conditioning appraisal on one party’s view of whether more negotiation would help conflicts with the plain language and intent of SB 458. In TDI’s reading, a “dispute” requires only disagreement, not a showing that agreement is impossible. TDI also declined to let policies impose waiting periods or require an exchange of estimates before a demand.

The fire total-loss carve-out was added in response to comments. Under Texas’s valued policy law, once real property is a total loss by fire, the policy amount is treated as a liquidated demand. Appraisal under Chapter 1813 therefore does not apply in those cases.

3. The Appraisal Process Notice

Insurers must send an appraisal process notice at the same time as the notice of acceptance or rejection of the claim under Insurance Code §542.056 (§5.9803(a)). The notice may be a separate document or may be included in the §542.056 notice, and it may be delivered electronically under Insurance Code Chapter 35. It must be in plain language and at least 10-point type and must explain:

• where the appraisal provision appears in the policy;
• how to demand appraisal, including where to send the demand and what it should contain;
• the policyholder’s responsibilities, including the duty to hire an appraiser and any responsibility for appraisal expenses;
• how to request appointment of an umpire, including judicial appointment;
• the deadlines for demanding appraisal, appointing appraisers, selecting an umpire, and issuing the award; and
• the effect of the appraisal award.

TDI declined to promulgate a standard notice form. It stated that the notice does not alter an insurer’s prompt payment obligations under Insurance Code Chapter 542, Subchapter B.

4. Appraiser and Umpire Qualifications

All appraisers and umpires must be competent by training or experience to evaluate the type of loss in dispute, independent from the parties, and disinterested in the outcome (§5.9804(a)). For residential appraisals involving loss to a dwelling, they must also be one of the following (§5.9804(b)):

• an adjuster or public adjuster with experience or training in estimating residential property losses;
• an engineer or architect with experience or training in residential construction or repair, investigating residential property damage, or estimating residential property losses; or
• an individual who otherwise has occupational experience or training in constructing or repairing the type of damaged property, or in estimating the type of loss, at issue.

These are minimum qualifications, and policies may add more specific ones if they do not conflict with Division 4. TDI declined to define “independent” or “disinterested,” to adopt a code of ethics, or to create a licensing regime. It left qualification challenges to the parties and the courts.

5. Deadlines to Demand Appraisal

A demand must be in writing and delivered to the other party (§5.9805(a)). The adopted rules replaced the proposed one-year “use-it-or-lose-it” window with the following framework:

Situation	Deadline
General rule (§5.9805(a)(1))	By the expiration of the policy’s limitations period for filing suit
Insurer that receives a Chapter 542A pre-suit notice (§5.9805(a)(2))	Within 60 days after the notice is provided
Plaintiff after filing suit (§5.9805(a)(3)(A))	No longer available, unless the policy requires appraisal before suit may proceed and the policyholder sued before the limitations period expired
Respondent to a lawsuit, other than an insurer that received a 542A notice (§5.9805(a)(3)(B))	By the earlier of the date the answer is filed or the date it is due

The 60-day pre-suit window is specific to residential property and has no counterpart in the automobile rules. It ties to Chapter 542A, which governs first-party claims for weather-related damage to real property and requires a pre-suit notice at least 61 days before suit. In practice, an insurer that receives a 542A notice on a hail or wind claim must decide on appraisal within 60 days, before suit can be filed, and cannot later rely on the answer-date window. Policyholder counsel should note that filing suit generally ends the policyholder’s unilateral right to appraisal.

6. Procedure After Demand

Step	Residential deadline (§5.9805(b))
Each party hires an appraiser and gives written notice of the appraiser’s name and contact information	20 days after demand
Appraisers jointly choose an umpire	15 days after the appraisers are named or 15 days after the appraisers fail to agree on the loss (the policy must select one option)
Appraisers attempt to agree on the amount of loss	120 days after demand
Award issued when an umpire is involved	240 days after demand
Replacement umpire if no award by the deadline	15 days after the deadline (the original umpire’s engagement terminates)

If the appraisers fail to choose an umpire, the policy must allow either party to seek judicial appointment through a county or district court where the residential property is located. A policy may also offer (i) appointment by an independent vendor, which only the policyholder may invoke, and (ii) any alternative method the parties agree to in writing after appraisal is demanded. A party seeking judicial or vendor appointment must give at least 10 days’ written notice, identifying the court for judicial requests, and must provide a copy of the request on or before submitting it. TDI states that judicial appointment controls unless the policyholder invokes the vendor option or the parties agree otherwise.

All deadlines run from the date of demand, not from formation of the appraisal panel. TDI chose this approach to keep appraisal as one continuous process. Under §5.9805(c), the parties may modify any deadline by written agreement once the appraisal process notice has been provided. This includes agreeing to appraisal after the demand window has closed or extending deadlines for complex or catastrophe-related losses.

7. Issues the Rules Leave Open

TDI declined to address several issues that remain for policy language and the courts. These include the scope of “amount of loss” versus coverage questions, which items appraisers must consider, the interaction with prompt-payment interest, attorney’s fees after Rodriguez v. Safeco Ins. Co. of Ind., 684 S.W.3d 789 (Tex. 2024), tolling during appraisal, vendor cost allocation and disclosure, and appraisal-specific enforcement remedies. TDI said it will use its general enforcement authority, including administrative penalties under Insurance Code Chapter 84, and its existing complaint process to monitor compliance.

Part II: Commercial Property Claims

1. Express Exclusion

Section 5.9800(c)(2) states that Division 4 does not apply to commercial insurance policies. Chapter 1813 and the implementing rules are limited to personal automobile and residential property insurance as defined in §5.9801. As a result, none of the requirements described above apply as a regulatory matter to a commercial property policy. These include the mandatory unilateral right, the impasse prohibition, the appraisal process notice, the minimum qualifications, the demand windows, the 20/15/120/240-day timeline, and the judicial-appointment requirement.

2. What Continues to Govern Commercial Appraisal

Appraisal of commercial property losses will continue to be governed by the policy’s own appraisal clause, as interpreted under existing Texas case law, and by the general form-filing standards that apply to the particular line. Pre-existing doctrine therefore still controls commercial claims. That includes waiver, the role of impasse language, and challenges to awards. For example, a commercial policy may still condition appraisal on a failure to agree or an impasse, and courts will apply cases such as In re Acceptance Indemnity Insurance Co. to that language. Commercial policies may also lack fixed deadlines for naming appraisers or issuing awards.

3. Classification Questions

Because the regulated and unregulated regimes differ so much, counsel should confirm at the outset whether a policy is “residential property insurance” under §5.9801(7). Mixed-use and edge cases may require close review of the policy form. Examples include residential fire and allied lines dwelling policies, which are covered; landlord or investor policies on residential buildings written on commercial forms; and condominium association master policies, as opposed to unit-owner policies. The answer turns on the form and its classification, not merely on whether the building is residential.

4. Indirect Influence

Although the rules do not bind commercial policies, they may still influence commercial disputes. Courts and practitioners may look to TDI’s reasoning, for example its view that a “dispute” does not require impasse and its policy concerns about late-litigation appraisal demands, when they consider how to handle appraisal under commercial forms. Any such reliance would be persuasive at most, and parties should not treat the residential framework as controlling in commercial cases.

Part III: Automobile Losses

1. Which Policies Are Covered

Division 4 also governs personal automobile insurance policies delivered, issued for delivery, or renewed on or after March 1, 2027. “Personal automobile insurance” means coverage for the ownership, maintenance, or use of a private passenger, utility, or miscellaneous-type motor vehicle, including a motor home, trailer, or recreational vehicle, that is owned or leased by one or more individuals and not primarily used to deliver goods, materials, or services, other than for farm or ranch operations (§5.9801(6)). Commercial auto policies fall within the general exclusion for commercial insurance policies (§5.9800(c)(2)) and remain governed by their own terms.

TDI declined to extend the rules to uninsured and underinsured motorist property damage coverage. It reasoned that those coverages ordinarily turn on what the insured is legally entitled to recover from another motorist, and that appraisal provisions have typically not extended to them.

2. Common Requirements

The general requirements in §5.9802 apply equally to auto policies. These include the unilateral right to demand appraisal, the prohibition on an impasse requirement, coverage of both partial and total losses, and the binding effect of the award. The appraisal process notice under §5.9803 and the minimum qualifications under §5.9804(a) also apply. The impasse issue may matter more in auto claims, where commenters noted that differences between shop and insurer estimates are routinely resolved through supplements and reinspection. TDI nonetheless declined to permit waiting periods or exchange-of-estimate preconditions.

The heightened dwelling qualifications in §5.9804(b) do not apply to automobile appraisals. TDI rejected requests to require ASE or I-CAR certifications or similar auto-specific credentials. Instead, it relied on the general requirement that appraisers and umpires be competent to evaluate the type of loss in dispute and left insurers free to add more specific qualifications in their policies.

3. Deadlines to Demand Appraisal

TDI dropped the proposed 120-day demand window. Under §5.9806(a), a written demand delivered to the other party must be made by the expiration of the policy’s limitations period for filing suit. If a lawsuit is filed, the plaintiff generally can no longer demand appraisal unless the policy requires appraisal before suit may proceed and the policyholder sued within the limitations period. The respondent must demand appraisal by the earlier of the date the answer is filed or the date it is due. Because Chapter 542A applies only to real-property claims, the auto rules have no 60-day pre-suit-notice window.

4. Procedure After Demand

Step	Automobile deadline (§5.9806(b))
Each party hires an appraiser and gives written notice of the appraiser’s name and contact information	20 days after demand
Appraisers jointly choose an umpire	15 days after the appraisers are named or 15 days after the appraisers fail to agree on the loss (the policy must select one option)
Appraisers attempt to agree on the amount of loss	40 days after demand
Award issued when an umpire is involved	180 days after demand
Replacement umpire if no award by the deadline	15 days after the deadline (the original umpire’s engagement terminates)

TDI based the shorter 40-day and 180-day deadlines on its 2024 Appraisal Experience Report. That report found that over 75% of auto awards without an umpire were made within 40 days, and that 50% of awards involving an umpire were made within 114 days. Judicial appointments of an umpire must be available through a county or district court where the vehicle is principally garaged as identified in the policy. TDI added that language to prevent venue shopping. The policyholder-only vendor option, mutually agreed alternatives, the 10-day notice requirement, and the parties’ ability to modify deadlines by written agreement (§5.9806(c)) all mirror the residential rules. TDI rejected arguments that judicial appointments are too costly for modest auto disputes, noting that an umpire was used in only about 7% of auto appraisals.

5. Issues Left Open

TDI declined to define which valuation components fall within an auto appraisal. Examples include actual cash value, salvage value, repairability versus total loss, loss of use, diminished value, and rental expenses. It left those questions to the parties, the policy language, and the courts. It also did not address concerns about steering repairs to particular body shops.

Side-by-Side Comparison

Issue	Residential property (on or after Mar. 1, 2027)	Commercial property	Personal automobile (on or after Mar. 1, 2027)
Governing framework	Ins. Code ch. 1813; 28 TAC §§5.9800–5.9806	Policy language and existing case law; Division 4 does not apply	Ins. Code ch. 1813; 28 TAC §§5.9800–5.9806 (personal auto only)
Appraisal clause mandatory	Yes	No regulatory mandate	Yes (personal auto)
Impasse precondition	Prohibited	Permitted if in policy	Prohibited
Policyholder notice	Required with §542.056 notice	Not required by Division 4	Required with §542.056 notice
Appraiser/umpire qualifications	Competent, independent, disinterested; dwelling-specific criteria	As stated in policy	Competent, independent, disinterested
Demand deadline	Limitations period; 60 days after 542A notice (insurer); answer date (respondent)	As stated in policy or under waiver doctrine	Limitations period; answer date (respondent); no 542A window
Award deadline	240 days with umpire	As stated in policy, if any	180 days with umpire
Umpire appointment fallback	Judicial appointment must be available	As stated in policy	Judicial appointments where vehicles are principally garaged

Practical Takeaways

• Insurers writing residential property business should revise appraisal provisions, obtain form approval under Insurance Code Chapter 2301, and build the appraisal process notice into claim workflows before March 1, 2027.
• Policyholder counsel on residential claims should calendar the suit-limitations deadline as the appraisal deadline and weigh the loss of the unilateral appraisal right before filing suit.
• Insurer counsel receiving a Chapter 542A pre-suit notice on a covered residential policy should make the appraisal decision within 60 days.
• Defense counsel served with a suit on a covered policy without a 542A notice must demand appraisal no later than the answer date.
• Auto insurers should build the 40-day and 180-day deadlines and the principally garaged venue language into their forms, and policyholder counsel should note that UM/UIM property damage claims fall outside the rules.
• For commercial property claims, continue to analyze appraisal rights under the policy text and existing Texas authority, and confirm the policy’s classification first.

This article is for general informational purposes and is not legal advice. Readers should consult the adopted rule text and counsel regarding specific claims. The rule text can be found here.