88R1248 CJD-F
By: Jetton H.B. No. 597
A BILL TO BE ENTITLED
AN ACT
relating to an appraisal procedure for disputed losses under
certain property and casualty 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 PROCEDURES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1813.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to an insurer writing a property or casualty insurance
policy, including the FAIR Plan Association, the Texas Automobile
Insurance Plan Association, a Lloyd's plan, a reciprocal or
interinsurance exchange, a farm mutual insurance company, and a
county mutual insurance company.
(b) This chapter does not apply to the Texas Windstorm
Insurance Association.
Sec. 1813.002. RULES. The commissioner may adopt rules
necessary to implement this chapter.
Sec. 1813.003. REQUIRED POLICY PROVISION: APPRAISAL
PROCEDURE. An insurance policy described by Section 1813.001 must
contain an appraisal procedure that complies with this chapter.
SUBCHAPTER B. APPRAISAL PROCEDURES
Sec. 1813.051. APPRAISAL DEMAND. If the policyholder and
insurer fail to agree to the amount of a loss covered by the policy,
the policyholder or insurer may provide a written demand for an
appraisal to the other party.
Sec. 1813.052. SELECTION OF APPRAISERS. Not later than the
20th day after the date an appraisal demand is provided under
Section 1813.051, the policyholder and insurer shall each:
(1) select a competent appraiser; and
(2) provide written notice to the other party of the
appraiser's identity.
Sec. 1813.053. 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
1813.052.
(b) The appraisers may extend the deadline described by
Subsection (a) for a period not to exceed 60 days on agreement by
the appraisers, policyholder, and insurer.
(c) If the appraisers agree on the amount of the loss:
(1) the appraisers shall provide written notice of the
agreement to the policyholder and insurer; and
(2) the agreed amount is set as the amount of the loss.
(d) If the appraisers fail to agree on the amount of the
loss, the appraisers shall select a competent and impartial umpire.
If the appraisers do not agree on an umpire before the 20th day
after the deadline for the appraisers to determine the amount of the
loss under this section, a judge of a court in the county in which
the policyholder resides shall select the umpire on the request of
the policyholder or insurer.
(e) After the umpire is selected under Subsection (d), the
appraisers shall provide written notice to the umpire that
includes:
(1) the amount each appraiser sets for the loss; and
(2) any supporting documentation.
Sec. 1813.054. APPRAISAL SELECTION BY UMPIRE. (a) The
umpire shall determine the amount of the loss not later than the
30th day after the date the umpire receives the notice described by
Section 1813.053(e) by selecting one of the amounts submitted to
the umpire.
(b) The umpire may extend the deadline described by
Subsection (a) for a period not to exceed 60 days on agreement by
the appraisers, policyholder, and insurer.
(c) On deciding on the amount of the loss, the umpire shall
provide a written determination to the policyholder and insurer
that:
(1) sets the amount of the loss; and
(2) is signed by the umpire and the appraiser whose
appraisal amount is selected by the umpire.
(d) A determination provided under Subsection (c) does not
prevent either party from pursuing its rights under the policy or
law.
Sec. 1813.055. APPRAISAL EXPENSES. (a) Except as provided
by Subsection (c), the party selecting an appraiser shall pay that
appraiser.
(b) Except as provided by Subsection (c), the policyholder
and insurer shall equally divide and pay the umpire's expenses, as
applicable, and all other appraisal expenses.
(c) If at the end of the appraisal process the amount of the
loss is determined to be at least $1 more than the amount of the
insurer's proposed undisputed loss statement, the insurer shall
refund the policyholder's reasonable expenses incurred as a result
of the appraisal.
Sec. 1813.056. EFFECT OF APPRAISAL. (a) The appraisal does
not affect any applicable policy terms, including deductibles.
(b) The appraisal procedure provided by this chapter is
intended to function as a liquidated damages clause, and the use of
the procedure 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.
SECTION 2. 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, 2024.
SECTION 3. This Act takes effect September 1, 2023.