SB458

Regular Session

Relating to an appraisal process for disputed losses under personal automobile or residential property insurance policies.

CriticalImmediate action required

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Department of Insurance

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: January 1, 2026 (Applies to policies delivered, issued for delivery, or renewed on/after this date).
Agency Rulemaking: The Texas Department of Insurance (TDI) must adopt rules establishing appraisal deadlines and appraiser qualifications prior to the January 1, 2026 compliance date. Expect a condensed rulemaking and comment period in Q4 2025.

Immediate Action Plan

1. Audit Policy Forms: Immediately pull all personal lines policy forms to identify appraisal clauses that exclude "total loss" or lack specific timelines.
2. Update "Total Loss" Playbooks: Revise claims manuals to accept appraisal demands on total loss vehicles and property, removing any automatic denial instructions.
3. Monitor Rulemaking: Assign a compliance officer to track TDI drafts in Q4 2025 regarding appraiser qualifications; be prepared to submit public comments if proposed timelines are operationally unfeasible.
4. Prepare Filings: Have legal counsel draft compliant policy endorsements now, leaving placeholders for the specific deadlines TDI will announce, to ensure readiness for the Jan 1 filing deadline.

Operational Changes Required

Contracts

Policy Forms: You must review all personal auto and residential property forms. If your current appraisal clause does not align with the forthcoming TDI rules (specifically regarding deadlines and total loss), you must file compliant forms under Chapter 2301 before Jan 1, 2026.
Vendor Agreements (TPAs/Adjusters): Service Level Agreements (SLAs) with independent adjusting firms and TPAs must be amended. You must contractually obligate vendors to meet the specific appraisal completion timelines TDI will release later this year.

Hiring/Training

Claims Staff: Adjusters require immediate training on bifurcating disputes. They must distinguish "Amount of Loss" (subject to binding appraisal) from "Coverage" issues (not subject to appraisal).
Appraiser Vetting: You must establish a protocol to verify that selected appraisers and umpires meet the new qualification standards TDI will establish via rulemaking.

Reporting & Record-Keeping

Claims Management Systems (CMS): Update software to track three new statutory milestones to ensure compliance with forthcoming deadlines:
1. Date of Appraisal Demand.
2. Date of Appraiser Selection.
3. Date of Award.

Fees & Costs

Litigation Costs: While intended to reduce litigation, costs may initially rise as legal teams defend the definition of "Material Mistake" to challenge binding awards.
Appraisal Fees: Expect increased operational spend on appraisal fees as the statute explicitly mandates appraisal availability for total loss claims, a category previously often excluded by carriers.

Strategic Ambiguities & Considerations

The legislature has delegated the "mechanics" of this law to TDI. You must watch the *Texas Register* closely for the following undefined variables:

1. The "Speed" of Appraisal: The statute requires a deadline for appraisal completion but does not define it. If TDI sets a 30-day window, this will severely strain vendor capacity.
2. "Material Mistake": This is a listed exception to a binding award but is undefined in the statute. This term will likely be the primary subject of early litigation to determine if it covers simple calculation errors or broader methodological flaws.
3. Qualifications: If TDI sets onerous licensing or certification requirements for appraisers, rural areas may face a shortage of qualified personnel, creating compliance bottlenecks.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsInsurance Insurance--motor Vehicles Insurance--property & Casualty Insurance, Commissioner of Taxation Taxation--property-appraisals & Appraisal Districts

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 458
89R5448 DNC-D	By: Schwertner
	Business & Commerce
	3/24/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The appraisal process serves as a method of dispute resolution to determine the amount of loss when there is a disagreement between the policyholder and the insurer.

Appraisals in residential and personal auto policies have long been the status quo. However, some companies in Texas have attempted to remove this clause and in 2015, one of the largest personal auto insurance carriers successfully filed and removed the appraisal process from policies for partial vehicle loss. Without clear statutory requirements, state regulators do not have the authority to mandate access to appraisal in personal insurance policies filed with the Texas Department of Insurance (TDI).

S.B. 458 preserves the right to an appraisal provision in certain insurance policies, requiring insurers to include it in personal home and auto policies.

As proposed, S.B. 458 amends current law relating to an appraisal process for disputed losses under personal automobile or residential property insurance policies.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance in SECTION 1 (Section 1813.002, Insurance Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subtitle A, Title 10, Insurance Code, by adding Chapter 1813, as follows:

CHAPTER 1813.� APPRAISAL OF DISPUTED LOSSES

Sec. 1813.001.� APPLICABILITY OF CHAPTER.� (a)� Provides that this chapter applies only to a personal automobile or residential property insurance policy delivered, issued for delivery, or renewed in this state by an insurer, including certain companies, plans, and exchanges.

(b)� Provides that this chapter does not apply to an insurance policy delivered, issued for delivery, or renewed by the Texas Windstorm Insurance Association or a commercial insurance policy.

Sec. 1813.002.� RULES.� Requires the commissioner of insurance (commissioner) to adopt rules necessary to implement this chapter, including rules establishing the period in which an appraisal under a provision required by this chapter is required to be completed. Requires the commissioner, in adopting the rules establishing that period, to allow flexibility for an adequate investigation of the claim that is the subject of the appraisal and consider the time necessary to preserve the independence of the appraisers.

Sec. 1813.003.� REQUIRED POLICY PROVISION: APPRAISAL PROCESS. (a)� Requires that an insurance policy described by Section 1813.001(a) contain an appraisal provision that complies with this chapter.

(b) Provides that the appraisal provision required by this chapter is intended to provide a type of dispute resolution process solely to determine the amount of loss when that amount is in dispute between the policyholder and the insurer.

Sec. 1813.004.� EFFECT OF APPRAISAL.� (a) Provides that an appraisal under the provision required by this chapter does not affect any applicable policy terms.

(b)� Provides that, except for fraud or material mistake relevant to the appraisal, the amount of loss determined by an appraisal under this chapter is binding as to the policyholder and the insurer.

SECTION 2. Makes application of Chapter 1813, Insurance Code, as added by this Act, prospective to January 1, 2026.

SECTION 3. Effective date: September 1, 2025.

Senate Authors

Sen. Charles SchwertnerRepublican · Primary Author

Coauthors (2)

House Sponsors

Rep. Jay DeanRepublican · Primary Sponsor

Joint Sponsors

Mary Perez (D)

Cosponsors (1)

Trey Martinez Fischer (D)

Bill Text(with markup)

S.B. No. 458

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to an appraisal process for disputed losses under personal
	automobile or residential property insurance policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subtitle A, Title 10, Insurance Code, is amended
	by adding Chapter 1813 to read as follows:
	CHAPTER 1813. APPRAISAL OF DISPUTED LOSSES
	Sec. 1813.001. APPLICABILITY OF CHAPTER. (a) This chapter
	applies only to a personal automobile or residential property
	insurance policy delivered, issued for delivery, or renewed in this
	state by an insurer, including:
	(1) a capital stock insurance company;
	(2) a mutual insurance company;
	(3) a county mutual insurance company;
	(4) a Lloyd's plan;
	(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) an insurance policy delivered, issued for
	delivery, or renewed by the Texas Windstorm Insurance Association;
	or
	(2) a commercial insurance policy.
	Sec. 1813.002. RULES. (a) The commissioner shall adopt
	rules necessary to implement this chapter, including:
	(1) rules establishing the period in which an
	appraisal under a provision required by this chapter must be
	completed; and
	(2) rules mandating an appraisal for total loss and
	damage of the property that is the subject of the appraisal.
	(b) In adopting rules establishing the period described by
	Subsection (a)(1), the commissioner must consider the
	qualifications and selection of appraisers and umpires for the
	appraisal.
	Sec. 1813.003. REQUIRED POLICY PROVISION: APPRAISAL
	PROCESS. (a) An insurance policy described by Section 1813.001(a)
	must contain an appraisal provision that complies with this
	chapter.
	(b) The appraisal provision required by this chapter is
	intended to provide a type of dispute resolution process solely to
	determine the amount of loss when that amount is in dispute between
	the policyholder and the insurer.
	Sec. 1813.004. EFFECT OF APPRAISAL. (a) An appraisal under
	the provision required by this chapter does not affect any
	applicable policy terms, and an appraisal award must be made in
	substantial compliance with the appraisal clause of the insurance
	policy.
	(b) Except for fraud, accident, or material mistake
	relevant to the appraisal or an appraisal award made without
	authority, the amount of loss determined by an appraisal under this
	chapter is binding as to the policyholder and the insurer.
	SECTION 2. (a) Chapter 1813, 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 required to be filed under
	Chapter 2301, Insurance Code, providing for an appraisal process
	that is in use on January 1, 2026, and otherwise compliant with
	Chapter 1813, Insurance Code, as added by this Act, is not required
	to be filed with the Texas Department of Insurance as a consequence
	of this Act.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 25, 2025

TO:	Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB458 by Schwertner (Relating to an appraisal process for disputed losses under personal automobile or residential property insurance policies.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

454 Department of Insurance

LBB Staff:

JMc, RStu, BFa

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Frequently Asked Questions

Common questions about SB458

What does Texas SB458 do?

SB 458 mandates a binding appraisal process for disputed losses in personal automobile and residential property insurance, effectively removing insurer discretion to deny appraisal on "total loss" claims. This legislation requires all personal lines carriers—including County Mutuals and Surplus Lines—to revise policy forms and claims workflows to adhere to strict, state-defined timelines and appraiser qualifications by January 1, 2026. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: January 1, 2026 (Applies to policies delivered, issued for delivery, or renewed on/after this date).

Who authored SB458?

SB458 was authored by Texas Senator Charles Schwertner during the Regular Session.

When was SB458 signed into law?

SB458 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB458?

SB458 is enforced by Texas Department of Insurance.

How urgent is compliance with SB458?

The compliance urgency for SB458 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB458?

The cost impact of SB458 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB458 address?

SB458 addresses topics including insurance, insurance--motor vehicles, insurance--property & casualty, insurance, commissioner of and taxation.

Legislative data provided by LegiScanLast updated: November 25, 2025

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