Texas finalizes appraisal rules as consumer advocates push for stronger safeguards

Texas regulators are nearing final rules for the state’s Mandatory Right to Appraisal law after a public hearing drew broad consumer support and no public opposition to core reform proposals. The outcome could shape how insurers and policyholders resolve auto damage disputes before the September 1, 2026 compliance date.

Why it matters: - Texas is close to setting the practical rules for Senate Bill 458, the 2025 law that requires insurance policies in the state to include an Appraisal Clause. - The final rule package will determine whether the new right to appraisal gives policyholders real leverage in claims disputes or only a theoretical protection. - The rules could also become a model for other states watching Texas as they weigh similar consumer-protection measures.

What happened: - The Texas Department of Insurance held its official public hearing on Docket No. 2862 as it prepares to finalize Mandatory Right to Appraisal rules. - The hearing was described as the last opportunity for public testimony before TDI issues final administrative rules. - Stakeholders from insurance and automotive sectors reviewed the proposed framework and offered comments on how the appraisal process should work. - Auto Claim Specialists, led by president and founder Robert McDorman, used the hearing to push for tighter consumer protections. - Public testimony produced no public opposition to the core consumer-focused amendments supported by Auto Claim Specialists and allied watchdogs.

The details: - TDI’s April draft included proposed §5.9806(b)(3), which would allow insurers to build vendor-based umpire selection mechanisms into policies before any dispute exists. - Testimony from public adjusters, attorneys and consumer advocates focused on the risk that carrier-controlled vendor systems could create structural disadvantages, hidden fees and weaker neutrality in binding disputes. - McDorman testified that a vendor-based umpire mechanism without a clear right to seek judicial appointment would let insurance carriers systematically influence appraisal outcomes. - McDorman urged TDI to make a timely request by either party for judicial appointment override any vendor-based selection process written into a policy. - McDorman said the appraisal award is binding on both parties under §5.9802, so the process used to select the neutral decision-maker matters as much as the award itself. - McDorman also said most policyholders lack the legal resources to challenge carrier-embedded default provisions. - McDorman recommended that insurers clearly notify policyholders they may choose between vendor selection and judicial appointment at claim time, rather than being locked into policy language written before a dispute. - McDorman urged TDI to require disclosure of any financial relationships between listed appraisal vendors and insurers or their affiliates. - McDorman argued that if an insurer uses a vendor-based process, the insurer should pay the full cost of the vendor and the umpire. - McDorman said those changes would align the rules with the Legislature’s intent under SB 458. - McDorman also called for licensing requirements, continuing education and enforceable ethical standards for appraisers and umpires. - McDorman pointed to Insurance Code Chapter 84, which allows TDI to impose administrative penalties of up to $25,000 per violation, per day. - Auto Claim Specialists said its public advocacy campaign on TDIadvocates.com collected 1,072 petition signatures from Texas policyholders opposing carrier-controlled vendor umpire mechanisms. - McDorman said the signers were individual Texas policyholders, not lobbyists or trade associations, and that their comments should count as material evidence for the rulemaking. - The campaign and broader effort trace back nearly a decade, when State Farm removed the Appraisal Clause from certain Texas auto policies for repair procedure disputes. - Over the past decade, McDorman said he testified before legislative committees, met with regulators, conducted claims research and wrote monthly “Ask the Expert” editorials in Texas Automotive magazine. - Auto Claim Specialists said it worked with the Auto Body Association of Texas, Texas Watch, lobbyists Andrew “Drew” Graham, Jacob Smith and Jesus Moreno, plus lawmakers from both parties and industry professionals, to help build support for SB 458. - TDI now enters its final rulemaking phase before the September 1, 2026 compliance date.

Between the lines: - The debate is no longer about whether Texas needs appraisal rights; the fight is now over who controls the neutral umpire and how much transparency consumers get. - The absence of public opposition to the core consumer amendments suggests the proposed safeguards may have broad procedural support, even if details still need refinement. - McDorman’s push for judicial appointment, cost shifting and disclosure rules reflects a larger concern that policy wording written by insurers could shape outcomes before any claim dispute begins. - The hearing also showed how advocacy around appraisal rights has moved from niche insurance policy debate into a broader consumer-protection campaign.

What's next: - TDI will review hearing testimony and move toward final adoption of the rules before the September 1, 2026 implementation deadline. - The department can still refine how vendor-based selection, judicial appointment, disclosure and cost responsibility will work in practice. - Advocates expect the final version to determine whether Texas policyholders get a fully enforceable dispute-resolution process or a weaker version constrained by carrier-controlled procedures. - Auto Claim Specialists said interested readers can review its submitted comments at the company’s Texas appraisal rules page.

The bottom line: - Texas is about to lock in the rules that will decide whether Mandatory Right to Appraisal becomes a strong consumer remedy or a process shaped by insurer control.