Industry News

Texas Proposed Rule Could Give Insurers More Control Over the Appraisal Process

This article is commentary by the CCA team on recent reporting from Repairer Driven News.

Texas recently passed SB 458, requiring auto insurance policies to include appraisal provisions — a win for policyholders who want the ability to dispute claim valuations through independent appraisal.

But a proposed rule implementing the law has raised serious concerns about who actually controls the process.

What’s Being Proposed

The Texas Department of Insurance released a rule that would allow insurers to offer multiple methods for selecting an umpire when the two appointed appraisers can’t agree. These methods include:

• Selection through an “independent vendor” — from a list the insurer provides
• Mutually agreed-upon alternatives after the appraisal demand is made

On the surface, options sound good. But look closer.

The Concern: Who’s Really Independent?

Robert McDorman, a leading Right to Appraisal advocate, has raised a critical point: vendors on a carrier-approved list have an institutional incentive to produce results favorable to the insurer.

Think about it. If a vendor consistently produces umpire decisions that cost an insurance company money, how long does that vendor stay on the carrier’s approved list?

That’s not independence. That’s a managed outcome with the appearance of fairness.

McDorman has proposed amendments that would:

• Give policyholders the right to choose which umpire selection method is used — not the carrier
• Require carriers to disclose any compensation arrangements with vendors listed in the policy
• Make insurers responsible for all vendor-appointed umpire costs since they control the process

Why This Matters Beyond Texas

The appraisal clause is one of the most powerful tools policyholders have to challenge a low total loss or repair claim valuation. When you invoke it, you’re taking the dispute out of the insurance company’s hands and putting it in front of independent professionals.

But the word “independent” is doing a lot of heavy lifting. If the insurance company gets to choose who the umpire is — directly or through a curated vendor list — the process isn’t truly independent.

Other states watch what Texas does. If this rule passes as written, expect similar proposals elsewhere.

What You Can Do

• Know your policy’s appraisal clause — Read the specific language. Understand how the umpire is selected under your current policy.
• Choose a qualified appraiser — Your appraiser’s credibility and expertise matter enormously in the umpire process. Don’t cut corners here.
• Stay informed — Rules like this one are decided through public comment periods. If you’re in Texas, your voice matters.
• Understand your options — Even without a perfect appraisal clause, you can challenge a low offer through demand letters and other mechanisms.

The appraisal process only works when it’s truly independent. We’ll be watching this one closely.

Related Resources

• Your Right to Appraisal — How the appraisal clause works step by step.
• First-Party vs. Third-Party Total Loss — Know which path gives you access to the appraisal clause.
• What Is a Total Loss? — Total loss fundamentals.