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Texas fair appraisal bill heads to senate for final vote

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The Texas House of Representatives has passed a bill that would ensure the accuracy of repair estimates within state auto policies.

House Bill 1437 (HB1437), which would amend Texas’ insurance code, will now head to the senate for a final vote.

The bill, sponsored by Rep. Travis Clardy (R-District), and its Senate companion SB 554, is consistent with recommendations in January from the Texas Office of Public Insurance Council (OPIC).

The insurance council said that the right to appraisal on insurance claims be made a mandatory part of policies. The Texas Department of Insurance (TDI) also highlighted the issue in its biennial report.

HB1437 aims to ensure insurance estimates are a true reflection of the actual cost of repairs. Under the proposed new legislation:

    • Personal auto insurance policies would be required to contain an appraisal procedure that complies with the insurance code’s amendments;
    • The insurance company and insured person could demand an appraisal within 90 days of the proof of loss;
    • Both the vehicle owner and insurance company would be required to appoint “competent appraisers;” and
    • If those appraisers could not agree on the amount of loss, they would select a mutually agreed upon umpire to determine the true cost of repairs.

Jill Tuggle, executive director of the Auto Body Association of Texas,  said the bill is necessary to prevent more insurance carriers from pulling the appraisal clause from their policies, causing a “ripple effect that will have a negative impact on the industry.”

“When we allow insurance companies to self-police and manipulate the system then their accountability wanes and shops will be put under even more pressure to cut corners,” Tuggle told Repairer Driven News.

Moving forward, she said it’s critical to continue educating the Texas Department of Insurance (TDI) and the Office of the Public Insurance Counsel (OPIC) on the issues repairers face.

“Awareness is key,” she said. “Continually educating the TDI and OPIC on the importance of safe repairs and helping them to understand that bill pay disputes boil down to safety and proper indemnification and that the ‘greedy body shop’ narrative is actually a cunning deflection tactic used to further suppress and victimize shops who are trying to do the right thing.”

During a house insurance committee hearing, retired Dallas nurse Cindy Hellstern urged lawmakers to pass both HB1437 and SB 554.

She shared with lawmakers her experience trying to have her car repaired rather than declared a total loss after it sustained “very minor” body damage.

It would have cost $2,600 to fix it, she said, but her insurer refused to do so and instead insisted on declaring it a total loss.

“It was in the height of the pandemic when you could not buy a used car,” she said. “They wanted my car for parts, or to sell.”

Since Hellstern wanted to keep her car, she tried to escalate the issue to company executives, but said her requests were denied. Hellstern eventually secured an independent appraisal and, after a seven-month process, was permitted to keep her car with a clean title and have it repaired.

“I urge our elected officials to pass both of these bills,” she said in a follow-up interview with consumer advocacy group Texas Watch. “If they don’t pass these bills, they are representing multi-billion dollar insurance companies.”

The Auto Body Association of Texas is also advocating for HB1437.

“The consumer has a right to hire and appraiser who will work with the insurance company’s appraiser to come to an agreement,” it says on its website. “Two Insurance companies in Texas have submitted policies that omit the customer’s right to invoke their right appraisal. We are working to preserve this right for Texas consumers.”

During an earlier senate business and commerce committee hearing on SB 554, Beamon Floyd, director of the Texas Coalition for Affordable Insurance Solutions, said the coalition is opposed to the bill but does “appreciate the direction that the substitute is going.”

“We do agree that appraisal is very important and are working in a variety of spaces on this appraisal process,” he said. “Our chief issue with 554 is the fee-shifting provision in the bill that has one party or the other pay depending on the outcome of the appraisal. We think that there shouldn’t be a shift and each side should pay their cost of the appraisal to preserve the objectivity of that appraisal.

“We think there’s other language that we need to make sure that all companies in the marketplace would not have to automatically refile their policies, which would be expensive and quite an avalanche for TDI. But we would love to work with Chairman Hughes and his folks on our issues.”


The Texas Capitol is shown. (TriciaDaniel/iStock)

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