The Texas legislature will reconsider a mandatory appraisal bill during the upcoming 2025 session that nearly passed the last session in 2023.

Many car insurance policies include an appraisal clause that policyholders can invoke to have a third-party appraisal done when they don’t agree with their carrier’s valuation of their vehicle or damages. Both the carrier and the policyholder hire an independent appraiser and if the appraisers can’t agree, an umpire is selected to make the final decision.

“This bill is going to benefit the industry,” said Burl Richards, Auto Body Association of Texas (ABAT) president. “Once these appraisals go through the process, it helps to determine what the actual prevailing practice is — what should be considered the norm. Right now, insureds [claims] are basically left up to the insurance companies to determine what is fair and reasonable and what a proper repair is. That’s not right. The billpayer should not be determining that, especially when they’re not the ones making the repairs and they’re not the ones liable for the repairs once they leave the shop.”

Sen. Charles Schwertner (R-District 5) sponsored SB 369 and filed it on Nov. 14.

The proposed bill would amend current law to:

• • Require an appraisal procedure in all personal auto insurance policies that complies with the insurance code’s amendments;
  • Allow appraisal requests by an insurance company or insured person within 90 days after the insurer accepts liability and issues the insurer’s undisputed liability offer;
  • Require the vehicle owner and insurance company to appoint “competent appraisers;” and
  • Require those appraisers to select a mutually agreed upon umpire to determine the true cost of repairs if they can’t agree on the amount of loss within 30 days.

If an appraisal determines the amount of loss to be more than 10% above the insurer’s last offer, the insurance company would refund the claimant reasonable out-of-pocket appraiser fees and expenses, according to the bill.

If the award is more than 10% below the amount the insurer last offered, the claimant would refund the insurer for the appraiser’s reasonable fees and expenses.

“We want to see the right thing done,” said Richards. “If someone’s asking an insurance company to indemnify them for repair, that’s not necessarily wrong. It could work in the insurance company’s favor, too. It works in both’s favor. I think the whole point is the transparency and the fairness of the repair or the outcome of the claim.”

The Texas Office of Public Insurance Council (OPIC) recommended the right to appraisal on insurance claims be a mandatory part of policies in 2023.

OPIC noted in its report to the legislature that it is “increasingly concerned with restrictions on appraisal in policy forms filed by top insurers.”

Within the last eight months, Progressive and Home State County Mutual filed policy change requests with the Texas Department of Insurance (TDI) to remove the right to appraisal on a repair procedure dispute from their policies, according to Robert McDorman, ABAT board member and Auto Claim Specialists general manager.

The option of having a third-party appraisal done was the general standard for years in Texas auto insurance claim disputes until 2014 when State Farm sought approval from TDI to remove the clause from its policies. Approval was granted in 2015. GEICO sought approval to remove the clause in 2021 to which OPIC filed an objection with TDI. The insurer’s request was denied in 2022 for failure to address TDI’s questions.

“When there becomes a dispute over the repair methodology of the car, that dispute should be settled from professionals in the industry — unbiased professionals,” McDorman said. “Any removing of the right to appraisal or repair procedure dispute or any altering of the appraisal clause or repair procedure dispute is the enemy of a safe repair. If we can’t have the proper repair methodology defined by unbiased professionals in the industry then there’s going to be room for error. That’s where we are now.”

The 2025 legislative session begins Jan. 14.

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