Texas adopts final right to appraisal rules with changes following comments

The Texas Department of Insurance (TDI) has adopted its final appraisal rules with some changes after receiving more than 1,000 letters from Texans, according to the TDI Advocates website ran by Auto Claims Specialists.

Changes include giving the insured the right to choose the umpire selection method at the time of dispute. Another change gives the insured the contractual option to seek judicial appointment of an umpire.

TDI’s original proposed rule received pushback from the collision industry and consumers who said it stripped the bill of proponents’ intentions.

The state Legislature passed a right to appraisal (RTA) bill last year. The bill directs TDI to adopt rules for the code change.

Robert McDorman, Auto Claims Specialists’ general manager and Auto Body Assocation of Texas (ABAT) representative, previously told RDN that the proposed rule removed the consumer’s judicial right to have a court-appointed umpire.

The proposed rule authorized insurers to include, in addition to judicial appointment, other methods of umpire appointment. A TDI explanation said that some residential property appraisal provisions currently provide for the umpire to be chosen by an independent vendor if the appraisers cannot agree.

According to the explanation, the insurer would have to include at least two vendors and let the policyholder select the vendor or allow only the policyholder to invoke this option.

Auto Claims Specialists’ campaigned for four changes to the proposed rule. Two of the four changes were made by TDI prior to approval.

One of the changes not adopted by TDI would have required insurers to disclose financial relationships with listed vendors in the policy. The other change not adopted would have required that if a vendor mechanism was used, the insurer bears the full cost, not the insured.

“TDI declined to shift vendor or umpire costs to insurers and declined to cap umpire fees, saying the policyholder-only trigger for the vendor option already addresses the cost and fairness concern,” TDI Advocates’ webpage states.

Insurance companies have until March 1, 2027, to comply with the new rule.

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