Texas Homeowners Insurance Appraisal Under TDI's Adopted Rules: Demand Deadlines, the 240-Day Clock, and Who Can Serve

On November 6, 2026, the Texas Department of Insurance adopted 28 TAC §§5.9800 to 5.9806 in Commissioner's Order No. 2026-10210, the rules that put Senate Bill 458 into operation. SB 458 (89th Legislature, 2025) added Chapter 1813 to the Insurance Code. It requires personal auto and residential property policies to contain an appraisal provision, limits appraisal to determining the amount of loss, and makes the award binding. The statute left the mechanics to TDI, and the rules now supply them: who can demand appraisal and until when, how fast the panel must work, how the umpire is picked, and who is qualified to sit.

This article covers residential property policies: homeowners, renters, condominium, and dwelling fire. Personal auto runs on a parallel but faster timeline, covered in a companion article. The rules apply to policies delivered, issued for delivery, or renewed on or after March 1, 2027. TDI had proposed September 1, 2026, and moved the date after commenters said insurers needed time to redraft clauses, refile forms, and build a new policyholder notice into their claim systems. Several provisions also changed between proposal and adoption, so anyone relying on the May 2026 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, took comments from 204 commenters in a period that ended June 15, 2026, and adopted three of the seven sections (§§5.9801, 5.9803, and 5.9804) without changes. The changes that matter for residential claims:

Which policies are covered

Section 5.9801(7) defines residential property insurance as coverage against loss to tangible personal property or to residential real property at a fixed location, provided through a homeowners policy, including a tenants policy, a condominium owners policy, or a residential fire and allied lines policy. The insurers come from Insurance Code §1813.001(a): capital stock and mutual companies, county mutuals, Lloyd's plans, reciprocal exchanges, farm mutuals, eligible surplus lines insurers where Texas is the insured's home state, and the FAIR Plan Association. Policies written by the Texas Windstorm Insurance Association and commercial policies are outside both the statute and the rules.

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, and Chapter 1813 already makes the award binding on the amount of loss. 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 that renewed in December 2026 follows that policy's clause even if appraisal is demanded in mid-2027.

What every residential 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, partial or total, other than a total loss by fire subject to §862.053(a);
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 §5.9805; 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 ordinary form review under Insurance Code Chapter 2301. TDI declined to promulgate a uniform clause, so the wording will still vary by carrier.

No impasse requirement

Insurers pushed hardest on this point. Commenters cited In re Acceptance Indemnity Insurance Co., 562 S.W.3d 645 (Tex. App.-San Antonio 2018, no pet.), which describes an impasse as the point where both parties believe further negotiation would be futile. TDI's answer was that this standard is the problem: it would let one party's view that more talks could be fruitful keep the other party out of appraisal indefinitely. Chapter 1813 requires only that the amount of loss be in dispute. TDI also declined to amend the rule to let clauses impose a waiting period before a demand, and it noted that familiar wording such as "if we and you do not agree on the amount of loss, either may demand an appraisal" appears to fit the statute.

Amount of loss, not coverage

Chapter 1813 describes appraisal as a process "solely to determine the amount of loss," and §1813.004(a) provides that an appraisal "does not affect any applicable policy terms." TDI declined requests to define "loss," "amount of loss," or "covered loss," and declined to list the items appraisers may consider. That leaves the line where the Texas Supreme Court drew it in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009). Appraisers "must always consider causation, at least as an initial matter," the court said, yet "in most cases appraisal can be structured in a way that decides the amount of loss without deciding any liability questions." When an indivisible injury may have several causes, appraisers can assess the amount of damage and leave causation to the courts, which is where the concurrent-causation fights common in storm claims end up.

The total-loss-by-fire carve-out

Insurance Code §862.053(a) treats a fire policy, in a total loss by fire of the insured property, as a liquidated demand against the insurer for the full amount of the policy, and states that it does not apply to personal property. TDI added the carve-out after commenters argued that appraisal should not be used to reduce that liquidated amount or delay payment of building limits. Because §862.053(a) excludes personal property by its own terms, the carve-out on its face reaches only the real property. A contents valuation dispute after the same fire is not within it.

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:

The default: the suit-limitations period

TDI's proposal tied the demand deadline to the §542.056 notice accepting or rejecting the claim. Commenters objected that this let the insurer control when the countdown started, and that confusion over the trigger would generate its own litigation. The adopted rule ties the deadline instead to the limitations period for filing suit under the policy, which TDI expects will be more familiar to the parties and will reduce "deadline gamesmanship." Texas voids any contractual limitations period shorter than two years (Civil Practice and Remedies Code §16.070). In practice most demands have come much sooner: in TDI's 2024 appraisal data call, half of completed residential appraisals had been demanded within 101 days after the claim was reported, and 90% within 328 days.

The practical consequence is that any dispute over when the policy's limitations period began to run is now also a dispute over whether either side can still demand appraisal.

The insurer's 60 days after a Chapter 542A notice

Chapter 542A governs first-party claims under policies covering real property for damage caused wholly or partly by forces of nature: earthquake, wildfire, flood, tornado, lightning, hurricane, hail, wind, snowstorm, or rainstorm (§542A.001(2)). Before suing on such a claim, the claimant must give written notice at least 61 days before filing, stating among other things the specific amount alleged to be owed (§542A.003). Under §5.9805(a)(2), an insurer that receives that notice has 60 days to demand appraisal.

Three consequences follow from the text:

• The window closes before suit can be filed. Because the notice must precede the lawsuit by at least 61 days, an insurer that wants appraisal must decide during the notice period. An insurer that lets the 60 days pass does not get the later answer-date window, because §5.9805(a)(3)(B) excludes an insurer that was provided a pre-suit notice. Its only remaining route is agreement.
• Many claims never trigger it. A kitchen fire, a theft, or a plumbing leak is not a forces-of-nature claim, and §542A.003(d) excuses notice in some cases, such as when limitations is about to expire. With no pre-suit notice, the insurer's deadline after suit is its answer date.
• It binds only the insurer. A policyholder who sends the notice can still demand appraisal up until it files suit, subject to the suit-limitations deadline.

After a lawsuit is filed

Filing suit ends the plaintiff's unilateral right to appraisal, with one exception: a policyholder who sued before limitations expired may still demand appraisal if the policy requires appraisal before a lawsuit may proceed. TDI's reasoning is that in that case the insurer's own policy states a preference for appraisal first. The respondent's window is short by design. Commenters described an appraisal demanded two weeks before a scheduled trial after years of litigation, and TDI framed the answer-date deadline as keeping appraisal available at the start of a case while ensuring "it cannot be used for strategic advantage late in litigation." Because the deadline is the earlier of the answer's filing or due date, filing an answer early also closes the window early. Defense counsel and claim teams should treat the appraisal decision as part of suit intake.

Section 5.9805(a)(3) speaks of the plaintiff and the respondent, not the insurer and the policyholder, and its exceptions are narrow. An insurer that sues first is the plaintiff and can no longer demand appraisal, even under a policy that requires appraisal before suit, because that exception covers only a lawsuit filed by a policyholder. A policyholder sued by its insurer is the respondent and must demand appraisal by the date its answer is filed or due, whichever is earlier.

The appraisal timeline after a demand

Once a written demand is made, §5.9805(b) sets the clock:

Each policy must use either option A or option B for umpire selection. Option A mirrors the promulgated Texas homeowners policies, which TDI described as already using the 20-day appraiser deadline, the 15-day umpire deadline, and judicial appointment. Option B, in TDI's words, lets appraisers "avoid spending time and effort on choosing an umpire unless and until one is needed."

Exhibit 1

Source: 28 TAC §5.9805(b). Option A assumes both appraisers are named on day 20. Each policy uses option A or option B.

The trade-off is that every deadline runs from the demand, not from when the panel is complete. TDI rejected requests to start the clocks at panel formation or umpire appointment, saying that would risk undue delay. Under option B, the umpire might not be chosen until day 135. 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 100 days or less before the 240-day cap. Under option A, with appraisers named on day 20, the appraisers must choose the umpire by day 35.

If day 240 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, and TDI declined to add one or to require a refund of the first umpire's fees. It pointed instead to §5.9805(c), which lets the parties change any deadline by written agreement after the insurer provides the appraisal process notice, so that work already done is not lost. On a complex loss, or after a catastrophe when many claims compete for the same appraisers and umpires, the parties should agree on an extension before day 240 rather than after. Large losses deserve the closest watch: in TDI's 2024 data call, completed residential appraisals with awards over $100,000 had a median length of 150 days from the demand, against 77 to 107 days in every lower award band, so at least half of them ran past day 120, when the appraisers must now involve an umpire and the 240-day award deadline applies. The report does not show how many ran past day 240.

What TDI's data show about 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 69% of the Texas residential property market, from July 2020 to June 2023, and over 80% of the residential appraisals came from two of those groups. Its residential figures cover homeowners, condominium unit owner, and dwelling fire policies; renters and other contents-only policies 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 120-day and 240-day limits, and its demand timing to conclude that a one-year demand deadline was not needed to prompt most parties to demand without undue delay. 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 most recent claims had the least time to develop before insurers reported, so part of the drop in lawsuits may reflect timing. 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.

Claimants made nearly every demand. If that pattern holds under the rules, the deadlines that matter most in residential appraisal will be the ones a policyholder faces: the suit-limitations period, and the loss of the unilateral right once the policyholder sues, unless the policy requires appraisal before suit.

How the new deadlines compare with past appraisals

Appraisals without an umpire usually finished inside the new 120-day window: half within 74 days of the demand and 75% within 119 days. Appraisals with an umpire took far longer: half finished within 193 days, 75% within 278 days, and 90% within 393 days. Because a quarter of them took longer than 278 days, at least a quarter ran past day 240, the new cap.

Exhibit 2

Source: TDI, 2024 Appraisal Experience Data Call Report, p. 13 (appraisal length in days, residential property with umpire; claims reported July 2020 to June 2023). Adopted cap: 28 TAC §5.9805(b)(5).

Before the rules, about 16% of completed residential appraisals used an umpire, but the 240-day cap can reach more appraisals than that. TDI reads §5.9805(b)(4) and (b)(5) as working "in tandem," so appraisers who cannot agree within 120 days must involve an umpire; unless the parties agree in writing to more time, any appraisal still open on day 120 is then on the 240-day clock. Across all completed residential appraisals, half ended within 85 days of the demand, 75% within 149 days, and 90% within 247 days. At least a quarter therefore ran past day 120, and at least a tenth past day 240.

How the umpire is chosen

If the appraisers do not jointly choose an umpire in time, §5.9805(b)(3) controls:

• Judicial appointment is always available. Every clause must let either party ask a county or district court where the residential property is located to appoint the umpire.
• 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.

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. The policyholder notice must explain any responsibility for appraisal expenses.

Who can serve as an appraiser or umpire

Under §5.9804(a), every appraiser and umpire must be:

• 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.

When the appraisal involves loss to a dwelling, §5.9804(b) requires each appraiser and umpire to also be one of the following:

• an adjuster or public adjuster with experience or training in estimating residential property losses;
• an engineer or architect with experience or training in residential building construction or repair, investigating residential property damage, or estimating residential property losses; or
• an individual who otherwise has occupational experience or training in constructing or repairing the type of damaged property at issue, or in estimating the type of property loss at issue.

The dwelling tier turns on "loss to a dwelling," so a contents-only dispute, such as a typical renters claim, needs only the three general qualifications.

These are floors. Policies may add more specific qualifications that do not conflict with the rules, and TDI said it will review those through form filings and "take further action if needed." TDI declined requests to license appraisers and umpires, require good standing with another agency (which it said could exclude qualified people such as a retired adjuster), adopt a code of ethics (which it suggested may be a question for the legislature), define "independent" or "disinterested," or list disqualifying relationships. It also refused to bar adjusters and public adjusters from serving. They must meet the same independence and disinterest standards and, as TDI licensees, face discipline if they do not. Challenges to a particular appraiser or umpire go to the courts.

TDI reads "disinterested in the outcome of the appraisal" to include the outcome of the underlying claim, and says the requirement prevents 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. Parties using percentage-fee appraisers should expect qualification challenges.

The appraisal process notice

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. As TDI describes the statute, the §542.056 notice is ordinarily due within 15 days after the insurer receives the items it needs to secure final proof of loss. The appraisal notice may be a separate document or part of the §542.056 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.

TDI declined to promulgate a standard notice form, because the content depends on each insurer's clause. It rejected proposals to send the notice with the claim acknowledgment or with estimate letters instead, preferring a statutory marker every insurer already meets. It also declined to require the notice to say that no impasse is needed, citing possible consumer confusion. The notice does not change any prompt-payment obligation under Chapter 542, Subchapter B, and the rules do not stop an insurer from telling a satisfied policyholder that appraisal is not required.

One sequencing point is easy to miss. Read literally, §5.9805(c) allows the parties to modify deadlines only "after the insurer provides the appraisal process notice." A late or missing notice also delays the parties' ability to tailor the timeline by agreement.

What TDI left open

TDI repeatedly declined to reach issues it considered outside the rulemaking charge in SB 458. The main ones:

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 residential 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. Choose option A or option B deliberately. Option B spares the appraisers from choosing an umpire unless they have not agreed by day 120, but it compresses the umpire's working time, because the 240-day cap still runs from the demand.
3. Decide whether to offer a vendor option. If you do, the clause must let only the policyholder invoke it, and judicial appointment must remain available.
4. Attach the appraisal notice to the §542.056 workflow. Templates need the six required elements, stated for your own clause.
5. Calendar the 60-day window on every Chapter 542A notice, and route new suits to an appraisal decision at intake. The answer-date deadline leaves no room to decide later.

For policyholders, public adjusters, and policyholder counsel

1. Decide on appraisal before filing suit. After filing, the unilateral right is gone unless the policy makes appraisal a condition of suit.
2. Track the policy's suit-limitations date, not the date of the claim letter. That date now governs both suit and appraisal.
3. Vet appraisers against §5.9804(b) on any dwelling loss. Expect challenges to any compensation arrangement that ties the appraiser's pay to the award.
4. Know that the umpire route is yours to shape. Judicial appointment in the county where the property sits is always available, and a vendor appointment happens only if you choose it.

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 Insurance Code §862.053, Fire Insurance: Total Loss of Real Property
• Texas Civil Practice and Remedies Code §16.070, Contractual Limitations Period
• State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009)
• Rodriguez v. Safeco Insurance Co. of Indiana, 684 S.W.3d 789 (Tex. 2024)