Texas Auto Insurance Appraisal Under TDI's Adopted Rules: The 40-Day and 180-Day Clocks, Umpires, and Total-Loss Disputes

According to the Senate Research Center's analysis of SB 458, appraisal clauses in Texas personal auto and residential policies "have long been the status quo," but some insurers tried to remove them, and in 2015 one of the largest personal auto carriers successfully filed forms removing appraisal for partial vehicle losses. Without a statute, regulators lacked authority to require it. Senate Bill 458 (89th Legislature, 2025) closed that gap by adding Chapter 1813 to the Insurance Code. It requires an appraisal provision in personal auto and residential property policies, limits appraisal to determining the amount of loss, and makes the award binding. On November 6, 2026, the Texas Department of Insurance adopted the implementing rules, 28 TAC §§5.9800 to 5.9806, in Commissioner's Order No. 2026-10210.

This article covers personal auto. The rules apply to policies delivered, issued for delivery, or renewed on or after March 1, 2027, and they give auto its own, faster timeline: 40 days for the appraisers to try to agree and 180 days for an award when an umpire is needed, against 120 and 240 days for residential property, which is covered in a companion article. Several provisions changed between the May 2026 proposal and adoption, so anyone relying on the draft should recheck the points below.

What changed between the proposal and the adopted rule

TDI published the proposal in the May 8, 2026 Texas Register and took comments from 204 commenters, among them collision repairers, appraisal firms, auto dealers, insurers, and consumer advocates, in a period that ended June 15, 2026. The 40-day and 180-day deadlines were adopted as proposed. The changes that matter for auto claims:

Which policies and claims are covered

Section 5.9801(6) defines personal automobile insurance as coverage for the ownership, maintenance, or use of a private passenger, utility, or miscellaneous-type motor vehicle, including a motor home, trailer, or recreational vehicle, that is owned or leased by one or more individuals and is not primarily used to deliver goods, materials, or services, other than for use in farm or ranch operations. The covered insurers are those listed in Insurance Code §1813.001(a), including county mutuals, Lloyd's plans, reciprocal exchanges, farm mutuals, and eligible surplus lines insurers where Texas is the insured's home state. Commercial policies are excluded.

TDI also drew a line inside the policy. Asked whether the rules reach uninsured and underinsured motorist property damage, TDI said those coverages ordinarily turn on what the insured is legally entitled to recover from another motorist, that appraisal provisions have typically not extended to them, and that it "declines to extend these rules to uninsured or underinsured motorist coverage."

The auto disputes the rulemaking record focuses on are physical damage valuations: what a repair should cost, or what a totaled vehicle was worth. The Texas Supreme Court used the auto example itself in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009). Asked to assess damage from a fender-bender, the court said, appraisers "include dents caused by the collision but not by something else."

The compliance date does not reach back. SB 458 already requires an appraisal provision in policies delivered, issued for delivery, or renewed on or after January 1, 2026. But TDI's response to comments is explicit that for a policy issued or renewed before March 1, 2027, "the appraisal provision in the policy will control the appraisal process and is not subject to the new rules." A claim under a policy term that began in February 2027 follows that term's clause, even if appraisal is demanded after March 1.

What every auto appraisal clause must say

Section 5.9802 requires every covered policy to have an appraisal provision that:

1. states that either party has the right to demand appraisal unilaterally;
2. does not require the parties to reach an impasse before a party can demand appraisal;
3. applies to disputes about the amount of loss, including partial or total loss;
4. makes the award binding as to the amount of loss unless it was made without authority, was not made in substantial compliance with the appraisal provision, or there was fraud, accident, or material mistake relevant to the appraisal;
5. states the deadlines and process for appraisal, including the specific time periods in §5.9806; and
6. does not conflict with the rules or other Texas law.

Insurers may add terms that do not limit or violate Chapter 1813 or the rules, subject to form review under Insurance Code Chapter 2301. TDI declined to promulgate a uniform clause.

No impasse requirement, even mid-supplement

One commenter argued that an impasse requirement mattered most in auto, where differences between a repair shop's estimate and the insurer's estimate "arise routinely" and are often resolved through the supplement and reinspection process. The commenter proposed letting either party invoke appraisal only 15 days after exchanging statements and estimates. TDI declined. It said the parties already have incentives to settle, and that its data show appraisal is demanded in only a small percentage of claims and typically produces an award greater than the insurer's initial offer, suggesting appraisal "is not undertaken lightly or needlessly." Under a compliant clause, a dispute about the amount of loss is enough. The clause cannot make either side wait for negotiations, including a supplement cycle, to run their course.

Total losses are included

The required clause covers partial and total losses. The rule's only carve-out, for a total loss of real property by fire under Insurance Code §862.053(a), has no application to vehicles, so a dispute over what a totaled vehicle was worth is squarely within the required clause.

When appraisal must be demanded

Every demand must be in writing and delivered to the other party. The deadline depends on where the claim stands:

Unlike the residential rule, the auto rule has no deadline keyed to a pre-suit notice. Chapter 542A, which requires pre-suit notice for the claims it governs, reaches only claims under policies covering real property (§542A.001(2)).

The proposal would have closed the auto window 120 days after the §542.056 notice. Commenters warned that a consumer might not understand the valuation documents, might not know the clock had started, or might not know appraisal existed, and others objected that tying the countdown to an insurer's notice gave the insurer control over when it started. TDI moved the deadline to the policy's suit-limitations period, which Texas law does not allow to be shorter than two years by contract (Civil Practice and Remedies Code §16.070). TDI said data in its 2024 Appraisal Experience Data Call Report suggest that the proposed 120-day deadline was not needed to prompt most parties to demand appraisal without undue delay, noting that over 90% of personal auto appraisals were demanded within 120 days of the claim being reported. In the report's own table, half of completed auto appraisals had been demanded within 37 days of the claim being reported, and 90% within 118 days.

Once suit is filed, the plaintiff loses the unilateral right to appraisal unless the policy requires appraisal before a lawsuit may proceed and the policyholder sued before limitations expired. In that case, TDI reasoned, the insurer's own policy states a preference for appraisal first. The respondent must demand appraisal by the date its answer is filed or due, whichever comes first. TDI's stated aim was to keep appraisal available at the start of a case while ensuring "it cannot be used for strategic advantage late in litigation." Because filing an answer early also closes the window early, carriers should treat the appraisal decision as part of suit intake.

The appraisal timeline after a demand

Once a written demand is made, §5.9806(b) sets the clock:

Each policy must use either option A or option B for umpire selection. Much of this is new for auto: TDI noted that many personal auto appraisal provisions did not specify any deadline to select an appraiser or to choose an umpire.

Exhibit 1

Source: 28 TAC §5.9806(b). Option A assumes both appraisers are named on day 20. Each policy uses option A or option B.

Every deadline runs from the demand, not from when the panel is complete; TDI rejected requests to start the clocks at panel formation, saying that would risk undue delay. Under option B, the umpire might not be chosen until day 55. If the appraisers cannot agree on one, a court-appointed umpire arrives later still, after the 10-day notice period and however long the court takes, which can leave the umpire roughly 120 days or less before the 180-day cap. Under option A, with appraisers named on day 20, the appraisers must choose the umpire by day 35.

If day 180 passes without an award, the umpire's engagement ends automatically and the appraisers must choose a new umpire within 15 days. The rule sets no award deadline for the replacement. TDI declined to add one or to require a refund of the first umpire's fees, and pointed instead to §5.9806(c): the parties can change any deadline by written agreement after the insurer provides the appraisal process notice, so that work already done is not lost.

What TDI's data show about auto appraisal before the rules

TDI collected appraisal data from insurers because, as its 2024 Appraisal Experience Data Call Report explains, little public data showed how and when appraisal was used. The report covers first-party property damage claims reported to 12 insurer groups, representing about 83% of the Texas personal auto market, from July 2020 to June 2023; injury claims such as bodily injury and PIP were excluded. Demand timing, award amounts, awards compared with offers, appraisal length, and expense come from claim-level data on completed appraisals, as insurers reported them to TDI in 2024.

In the adoption order, TDI called the timeframes in §§5.9805 and 5.9806 "generally supported by findings in the Appraisal Experience Report." It cited the report's award timing for the 40-day and 180-day limits, and its demand timing for dropping the proposed 120-day demand deadline. The data call collected the demand and award dates for each completed appraisal, not when appraisers were named or an umpire was chosen, so the report does not speak to the 20-day and 15-day steps.

The years run July to June: the first covers claims reported from July 2020 to June 2021, the third from July 2022 to June 2023. The report does not split its auto figures between total and partial losses, so the award and offer figures mostly reflect total-loss claims, and the data predate the rules' requirement that every personal auto clause cover partial as well as total losses. The report prints no figure for what policyholders spent on appraisal. The full set of findings, with charts, is in Texas insurance appraisal by the numbers.

How the new deadlines compare with past appraisals

Appraisals without an umpire usually finished inside the new 40-day window: half within 21 days of the demand and 75% within 39 days. Appraisals with an umpire took far longer: half finished within 114 days, 75% within 210 days, and 90% within 297 days. Because a quarter of them took longer than 210 days, at least a quarter ran past day 180, the new cap.

Exhibit 2

Source: TDI, 2024 Appraisal Experience Data Call Report, p. 13 (appraisal length in days, personal auto with umpire; claims reported July 2020 to June 2023). Adopted cap: 28 TAC §5.9806(b)(5).

Before the rules, about 7% of completed auto appraisals used an umpire, but the 180-day cap can reach more appraisals than that. Under §5.9806(b)(4) and (b)(5), appraisers who cannot agree within 40 days must submit their differences to the umpire; unless the parties agree in writing to more time, any appraisal still open on day 40 is then on the 180-day clock. Across all completed personal auto appraisals, half ended within 22 days of the demand, 75% within 45 days, and 90% within 98 days, so at least a quarter ran past day 40.

How the umpire is chosen

If the appraisers do not jointly choose an umpire in time, §5.9806(b)(3) controls:

• Judicial appointment is always available. Every clause must let either party ask a county or district court where the vehicle is principally garaged, as identified in the policy, to appoint the umpire. TDI added the final phrase at commenters' request so the court would not change after the dispute arises and to prevent venue shopping. The garaging location shown in the policy, not where the car is being repaired or where the owner has since moved, fixes the court.
• A vendor option is the policyholder's choice. An insurer may name an independent vendor that offers umpire selection services, but only the policyholder can invoke it. TDI dropped the proposed two-vendor alternative after many commenters argued that insurer-selected vendors could tilt the panel.
• Any other method requires agreement after the demand. The parties may use an alternative method they agree to in writing after appraisal has been demanded.
• Either party must give notice before asking. A party seeking judicial or vendor appointment must give the other side written notice at least 10 days beforehand, identifying the court and its location for a judicial request, and must provide a copy of the request on or before submitting it.

One commenter argued that judicial appointment is too formal and expensive for a modest auto dispute, and that a consumer should not have to navigate a county or district court just to get an umpire. TDI kept it, calling judicial appointment fair given that the award binds both sides, and noting that, before the rules, an umpire was used in only about 7% of completed auto appraisals and that likely only a fraction of those umpires were chosen by any means other than appraiser agreement. A policyholder who would rather avoid court can invoke a vendor option if the policy offers one, or agree with the insurer on another method. TDI's order states that judicial appointment "will control unless a policyholder invokes the vendor-appointed method or both parties mutually agree in writing to an alternative appointment method after appraisal is demanded."

On cost, TDI's 2024 data call report describes the usual arrangement: "Each side pays its own appraiser and half of any other appraisal expenses, including the umpire." In the adoption order, TDI added that a vendor likely charges an additional fee for making the appointment. It declined to make insurers bear the full cost of a vendor-appointed umpire, reasoning that letting only the policyholder invoke the vendor route addresses the cost and fairness concerns, and declined to cap umpire fees as outside the rulemaking.

Who can serve as an appraiser or umpire

Auto appraisers and umpires must meet the three general qualifications in §5.9804(a): competent by training or experience to evaluate the type of loss in dispute, independent from the parties, and disinterested in the outcome of the appraisal. The added credential tier in §5.9804(b) applies only to appraisals involving loss to a dwelling, so the rules impose no license or certification requirement for auto.

Commenters asked TDI to extend the dwelling-style tier to auto, to require ASE and I-CAR Platinum certification, or to require competence in the specific valuation issue, pointing out that someone qualified to write a repair estimate or run estimating software may not be qualified to determine market value. TDI declined to add auto-specific credentials, but agreed that auto appraisal "involves skills that may vary based on the loss at issue," and said the competency requirement, which is tied to the type of loss in dispute, addresses that concern. A total-loss valuation (the most common kind of auto appraisal in TDI's data) and a repair-scope dispute can call for different expertise, and the parties can challenge the qualifications of an appraiser or umpire in court.

Policies may add more specific qualifications that do not conflict with the rules, subject to TDI form review. TDI declined to license appraisers or umpires, adopt a code of ethics, define "independent" or "disinterested," or require disclosure of a vendor's financial ties to an insurer. It reads disinterest to include the outcome of the underlying claim and to rule out a pecuniary interest in the outcome. The order does not address appraiser fee structures by name, but an appraiser paid a percentage of the award has exactly that kind of interest, so parties using percentage-fee appraisers should expect qualification challenges.

What auto appraisal will and won't decide

Commenters on both sides asked TDI to define the scope of an auto appraisal. Some wanted the rules to require appraisers to value every component needed to resolve the dispute, listing actual cash value, salvage value, cost of repair, loss of use, loss of market value, cost adjustments, and comparable vehicle analysis, with particular attention to total losses where the owner keeps the vehicle. Others asked TDI to exclude from an appraisal of a repairable vehicle items such as the amount of coverage, whether the vehicle is repairable or a total loss, and transportation and rental expenses.

TDI declined both requests. It said the parties and their representatives are best suited to decide what information to consider and what documentation supports the amount of loss, and that the rules "do not dictate what is or is not properly considered within an appraisal." Chapter 1813 adds that an appraisal "does not affect any applicable policy terms" (§1813.004(a)). Whether a policy owes for loss of market value, rental, or loss of use therefore stays where it was, in the policy language and the case law. Johnson's framework still applies: appraisers set the amount of loss and must consider causation at least as an initial matter, while coverage and liability questions stay with the courts.

The rules also leave one industry fight untouched. Responding to a comment about insurers steering repair work to large shops, TDI said the appraisal rules "do not address the topic of autobody shop steering."

The appraisal process notice in auto claims

Section 5.9803 requires the insurer to send an appraisal process notice at the same time as its §542.056 notice accepting or rejecting the claim. The notice may be a separate document or part of that letter, may be delivered electronically under Insurance Code Chapter 35, and must be in plain language in at least 10-point type. It must explain:

• where the appraisal provision is in the policy;
• how to demand appraisal, including where to send the demand and what it should include;
• the policyholder's responsibilities, including the duty to hire an appraiser and any responsibility for appraisal expenses;
• how to request appointment of an umpire if the appraisers do not choose one in time, including judicial appointment;
• the time limits, at a minimum for demanding appraisal, appointing appraisers, selecting an umpire, and issuing the award; and
• the effect of the award.

Commenters asked TDI to attach the notice to estimate cover letters or total-loss settlement offers instead, where the valuation actually reaches the customer. TDI kept the §542.056 timing as a consistent marker across insurers and across auto and property claims, and declined to promulgate a standard form. Carriers whose auto workflow sends estimates and total-loss offers separately from the formal acceptance letter should map exactly where the §542.056 notice goes out and attach the appraisal notice there. Read literally, §5.9806(c) also lets the parties modify deadlines only after this notice is provided, so a late notice delays any agreed change to the timeline.

What TDI left open

TDI also said it will monitor implementation and may recommend clarification or changes if problems appear.

Preparing for March 1, 2027

For carriers and claim organizations

1. File conforming forms early. Most personal auto policies are written on forms that need TDI approval under Chapter 2301. Commenters noted that renewals are commonly issued 45 to 60 days before the renewal date, which puts the first March 1, 2027 renewals in the mail between December 31, 2026 and January 15, 2027.
2. Track the 20-day and 15-day steps. Many auto clauses had no such deadlines, and the 40-day agreement window leaves little slack.
3. Choose option A or option B deliberately. Option B spares the appraisers from choosing an umpire unless they have not agreed by day 40, but it leaves less time under the 180-day cap when one is needed.
4. Tie the appraisal notice to the §542.056 letter, not the estimate. Templates need the six required elements, stated for your own clause.
5. Route new suits to an appraisal decision at intake. The answer-date deadline leaves no room to decide later.

For policyholders, repair shops, and independent appraisers

1. Make the demand in writing and deliver it to the other party. A phone call is not a demand, and only the insurer or the policyholder can make one.
2. Decide on appraisal before suing. After filing, the unilateral right is gone unless the policy makes appraisal a condition of suit.
3. Match the appraiser to the dispute. A total-loss valuation calls for market valuation competence; a repair dispute calls for repair estimating competence.
4. Check the garaging location in the policy. That location sets the county or district court that can appoint the umpire.

Sources

• TDI, Commissioner's Order No. 2026-10210, adopting 28 TAC §§5.9800 to 5.9806 (November 6, 2026)
• SB 458, 89th Legislature (2025), enrolled text
• Senate Research Center, Bill Analysis, SB 458 (enrolled)
• TDI, 2024 Appraisal Experience Data Call Report (December 2024)
• Texas Insurance Code Chapter 1813, Appraisal of Disputed Losses
• Texas Insurance Code Chapter 542A, Certain Consumer Actions Related to Claims for Property Damage
• Texas Civil Practice and Remedies Code §16.070, Contractual Limitations Period
• State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009)