HB 345

relating to an appraisal process for disputed losses under
residential property insurance policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subtitle D, Title 10, Insurance Code, is amended
by adding Chapter 2009 to read as follows:
CHAPTER 2009.  APPRAISAL PROCESS FOR RESIDENTIAL PROPERTY INSURANCE
SUBCHAPTER A.  GENERAL PROVISIONS
Sec. 2009.001.  APPLICABILITY OF CHAPTER.  (a)  This chapter
applies only to an insurer writing a residential property insurance
(1)  a capital stock insurance company;
(2)  a mutual insurance company;
(3)  a county mutual insurance company;
(5)  a reciprocal or interinsurance exchange;
(6)  a farm mutual insurance company;
(7)  an eligible surplus lines insurer if this state is
the insured's home state as defined by Section 981.002; and
(8)  the FAIR Plan Association.
(b)  This chapter does not apply to:
(1)  the Texas Windstorm Insurance Association; or
(2)  a commercial insurance policy.
Sec. 2009.002.  RULES.  The commissioner may adopt rules
necessary to implement this chapter.
Sec. 2009.003.  REQUIRED POLICY PROVISION: APPRAISAL
PROCESS.  (a)  Any appraisal provision contained in an insurance
policy described by Section 2009.001 must comply with this chapter.
(b)  The requirements of this chapter control over terms of
an insurance policy and other law only with respect to the specific
issues addressed in this chapter. All other terms and conditions of
the appraisal process remain subject to the terms of the insurance
(c)  The provisions of this chapter are not the sole
provisions that may be included in an appraisal process provided in
an insurance policy. Subject to any other provision of law, a policy
may include any other provision not in direct conflict with this
(d)  This chapter does not alter or provide an exception to
the prompt payment of claims deadlines under Subchapter B, Chapter
SUBCHAPTER B.  APPRAISAL PROCESS
Sec. 2009.051.  APPRAISAL DEMAND.  (a)  If the policyholder
and insurer fail to agree to the amount of loss covered by the
policy, the policyholder or insurer may provide a written demand
for appraisal to the other party.
(b)  The policyholder may not demand appraisal after the
policyholder files a lawsuit asserting the claim that is the basis
(c)  The insurer may not demand appraisal after filing the
insurer's original answer to the lawsuit.
(d)  The insurer may incorporate a demand for appraisal with
the insurer's original answer to the lawsuit.
(e)  If the policyholder files a lawsuit and the insurer
subsequently demands appraisal, the lawsuit may be abated until the
appraisal process is complete, provided that the insurer has not:
(2)  reserved the right to dispute coverage following
Sec. 2009.052.  SELECTION OF APPRAISERS.  Not later than the
20th day after the date an appraisal demand is provided under
Section 2009.051, the policyholder and insurer shall each:
(1)  select a competent and impartial appraiser; and
(2)  provide written notice to the other party of the
Sec. 2009.053.  APPRAISAL OF LOSS BY APPRAISERS; SELECTION
OF UMPIRE.  (a)  The appraisers shall appraise the loss that is the
subject of the appraisal not later than the 30th day after the date
both the policyholder and insurer have complied with Section
(b)  The appraisers may extend the deadline described by
Subsection (a) for a period not to exceed 30 days on written
agreement by the appraisers, policyholder, and insurer.
(c)  If the appraisers agree on the amount of loss:
(1)  the appraisers shall issue their award and provide
written notice of the award to the policyholder and insurer; and
(2)  the agreed amount as stated in the appraisal award
(d)  If the appraisers fail to agree on the amount of loss,
the appraisers shall select a competent and impartial umpire.  If
the appraisers do not agree on an umpire after the 20th day after
the deadline for the appraisers to determine the amount of loss
under this section, the umpire must be selected:
(1)  by a policy provision, if applicable, that
provides for the method of selecting an umpire; or
(2)  on written request by either party to a court
(e)  A policy provision may provide that a competent and
impartial umpire may be selected by a judge of a district court,
county court at law, or constitutional county court in the county in
which the policyholder resides or where the property is located.
(f)  A party requesting court appointment of an umpire must
provide the other party with 10 days' written notice of the intent
to submit the request.  The appointment may not be made on an ex
parte basis without both parties having an opportunity to appear
(g)  After the umpire is selected under Subsection (d) or
(e), each appraiser shall provide written notice to the umpire and
the other appraiser that includes:
(1)  the appraiser's determination as to the amount of
(2)  any supporting documentation; and
(3)  an itemized list of the disputed differences
between the appraisers regarding the amount of loss.
Sec. 2009.054.  AMOUNT OF LOSS DETERMINATION BY UMPIRE.  (a)
The umpire shall determine the amount of loss by selecting:
(1)  one of the amounts of loss submitted to the umpire;
(2)  an amount in between the two amounts submitted to
(b)  The umpire must select an amount under Subsection (a)
not later than the 30th day after the date the umpire receives the
submissions of both appraisers.
(c)  The umpire may extend the deadline described by
Subsection (b) for a period not to exceed 30 days on written
agreement of the appraisers, policyholder, and insurer.
(d)  On deciding on the amount of loss, the umpire shall
issue a written appraisal award that:
(1)  states the amount of loss; and
(2)  is signed by the umpire and at least one appraiser.
(e)  The umpire may not alter any valuation or any portion of
the amount of loss on which the appraisers agree.
(f)  An appraisal award issued under Subsection (d) does not
prevent either party from pursuing all other rights under the
Sec. 2009.055.  APPRAISAL EXPENSES; TERMINATION OF
APPRAISAL PROCESS.  (a)  The policyholder and insurer shall equally
divide and pay the umpire's expenses, as applicable, and all other
appraisal expenses, except that each party shall pay their own
(b)  If a party's appraiser materially fails to comply with
the deadlines under this chapter and the other party makes a good
faith effort to address the failure and continue the appraisal
process, the other party may terminate the appraisal process and
seek recovery of the party's reasonable hourly appraiser expenses
incurred in the appraisal process.
(c)  If the umpire materially fails to comply with the
deadlines under this chapter after making a good faith effort to
address the failure and continue the appraisal process, the
policyholder, the insurer, or both may terminate the appraisal
process and seek recovery of their reasonable hourly appraiser
(d)  If an appraisal process is terminated under Subsection
(b), the party employing the noncompliant appraiser may not invoke
the appraisal process for the dispute at issue.  However, the other
party may invoke the appraisal process for the dispute at issue.
(e)  If an appraisal process is terminated under Subsection
(c), the policyholder or the insurer may invoke the appraisal
process for the dispute at issue.
(f)  The appraisers for the policyholder and the insurer and
the umpire must be paid on an hourly or flat-fee basis, using a
reasonable hourly rate and based on the estimated number of hours
reasonably necessary to complete the appraisal process.  The
appraisers for the policyholder and insurer may not be paid on any
basis other than an hourly or flat-fee basis, including a
Sec. 2009.056.  EFFECT OF APPRAISAL.  (a)  The appraisal does
not affect any applicable policy terms.
(b)  The amount of loss determined by the appraisal process
under this chapter is binding as to the policyholder and the
insurer.  The use of the process is not a condition precedent to
bringing an action for a violation of this code, for a breach of
contract, or for any other common-law or statutory remedy.
Sec. 2009.057.  EXTENSION OF DEADLINES.  If the disputed
loss is the result of a weather-related catastrophe or major
natural disaster, as defined by the commissioner, the appraisal
deadlines imposed under Sections 2009.052 and 2009.053(a) and (b)
are extended for an additional 30 days.
SECTION 2.  (a)  Chapter 2009, Insurance Code, as added by
this Act, applies only to an insurance policy delivered, issued for
delivery, or renewed on or after January 1, 2026.
(b)  An insurance policy form providing for an appraisal
process that is in use on September 1, 2025, and otherwise compliant
with Chapter 2009, Insurance Code, as added by this Act, is not
required to be filed with the Texas Department of Insurance as a
SECTION 3.  This Act takes effect September 1, 2025.