Comments on Proposed Rules Implementing Texas SB 458
I. Introduction and Interest of UCP
United Claims Professionals (UCP) is a national association of public adjusters, claims professionals, and policyholder advocates with significant membership and claims activity in Texas. UCP submits these comments in response to TDI’s proposed rules implementing Texas SB 458 (89th Leg., R.S. 2025), codified at Chapter 1813 of the Texas Insurance Code.
SB 458 passed the Senate 29-0 and the House 143-0. That kind of unanimous passage reflects a clear legislative mandate: restore and standardize a fair appraisal process for Texas policyholders. The implementing rules should carry that mandate forward. Several provisions in the current draft risk undermining it, and UCP’s comments focus on four areas where revision is needed.
II. The Proposed Rules Should Not Narrow the Scope of “Amount of Loss”
A. The Statutory Text
Section 1813.003(b) of the enrolled bill provides:
The statute does not define “amount of loss.” That is not an oversight. The Legislature was aware of the term’s established meaning under Texas law and declined to restrict it.
B. How Texas Courts Have Read This Term
Texas courts have consistently held that “amount of loss” is not limited to a simple dollar calculation. Where disputes over scope of damage, repair methodology, or code upgrade requirements are intertwined with the valuation question, courts have found those disputes eligible for appraisal. The reasoning is practical: you cannot separate what a repair costs from what the repair requires. Splitting those questions between appraisal and litigation adds expense and delay for everyone involved.
If TDI’s rules define “amount of loss” in a way that excludes scope or methodology, the rules will be in tension with existing Texas case law and will generate immediate litigation over the boundary. That is the opposite of what SB 458 was designed to accomplish.
C. UCP’s Recommended Rule Language
UCP recommends TDI include the following clarification in the final rule:
This tracks the existing judicial framework, gives appraisers and umpires workable guidance, and keeps pure coverage questions out of appraisal without artificially fragmenting mixed disputes.
III. The One-Year Demand Deadline in Proposed § 5.9803(a) Is Unworkable for Complex Claims
A. The Proposed Rule
The draft rule at § 5.9803(a) requires that a residential property appraisal demand be made within one year of the date the insurer accepts coverage. Under current Texas law, appraisal can generally be invoked at any point unless it has been affirmatively waived, and Texas courts have set a high bar for finding waiver. The proposed rule is a significant departure from that baseline.
B. Why It Doesn’t Work for Large Losses
A one-year trigger measured from coverage acceptance creates real problems for complex residential claims:
- Major fire, water, or storm losses routinely take 12 to 18 months to adjust in good faith. By the time the parties have a clear picture of the scope gap, the one-year window may already be closed.
- Ongoing repair situations where the full extent of damage is not ascertainable until work is actually underway are particularly vulnerable. A policyholder who cooperates with the adjustment process in good faith should not lose appraisal rights as a result.
- TDI’s own 2024 Appraisal Experience Data Call Report found that most policyholders are unfamiliar with the appraisal process. A hard deadline running from an acceptance letter that may not signal any dispute will cut off rights before many policyholders know those rights exist.
C. The Coverage Denial Gap
The draft is also silent on what happens when coverage is denied in whole or in part. If the demand deadline runs from the date coverage is accepted, it is not clear whether appraisal is simply unavailable for denied claims or whether no deadline applies at all. Either reading creates problems, and the ambiguity will generate litigation. TDI should address this squarely in the final rule.
D. Recommended Revision
UCP recommends the demand deadline run from the later of: (1) one year from coverage acceptance, or (2) 180 days from the date the parties reach an impasse in the adjustment process, with a good-cause extension mechanism available on written request. This ties the deadline to when a genuine dispute actually exists rather than to an administrative trigger that may precede any real disagreement.
IV. Proposed § 5.9803(b)(5) Creates an Unworkable Umpire Loop
A. The Proposed Rule
Section 5.9803(b)(5) of the draft provides that if an appraisal award is not issued within 180 days of umpire selection, the appraisers may select a new umpire. The intent is to prevent delay. The practical effect is more complicated.
B. Three Problems with the Current Draft
- Infinite replacement loop: There is no limit on how many times an umpire can be replaced. If each replacement runs its 180-day window without issuing an award, the process can cycle indefinitely. A two-replacement cap with mandatory court appointment after the second failure would close that loop.
- Conflicting award risk: The rule does not address what happens when one appraiser selects a new umpire on day 181 while the original umpire issues a signed award on day 182. The resulting dispute over which award controls requires court intervention and defeats the point of appraisal. The rule needs to specify a clear cutoff for the original umpire’s authority.
- Undefined “issued”: The rule does not say whether an award is “issued” when it is signed by the umpire, delivered to the parties, or agreed to by at least one appraiser. That definition matters because the 180-day clock runs from issuance.
C. Recommended Revision
UCP recommends TDI revise § 5.9803(b)(5) to: (1) define “issued” as the date the signed award is delivered to both parties; (2) cap umpire replacements at two, with mandatory court appointment after the second failure; and (3) specify that the original umpire’s authority terminates on the date a replacement is agreed upon in writing by both appraisers.
V. The Cumulative Timeline Is Inconsistent with the Goals of SB 458
Adding up the draft rule’s individual deadlines, the minimum timeline for a standard residential appraisal looks like this:
That is a potential 390-day process before accounting for any umpire replacement. For comparison, the Texas Prompt Payment of Claims Act requires an insurer to acknowledge a claim within 15 days and to accept or reject it within 15 business days of receiving all required items. An appraisal process that can drag on for over a year offers policyholders no meaningful alternative to litigation.
UCP recommends a tighter default structure: 15 days to name appraisers, 60 days for appraiser agreement, 30 days for umpire selection, and 90 days for umpire award, with good-cause extensions available on joint application. That puts the default timeline at roughly 195 days and is far more consistent with what SB 458 was actually trying to accomplish.
VI. The “General Contractor” Qualification Standard Cannot Be Enforced as Written
The draft identifies three categories of qualified appraisers and umpires: licensed engineers or architects, licensed adjusters or public adjusters, and general contractors. The third category is not workable. Texas does not license general contractors. There is no state-maintained roster, no examination, and no regulatory definition of the term. Without a defined standard the qualification is either meaningless or arbitrary.
UCP recommends replacing “general contractor” with a functional, experience-based standard: any individual with at least five years of documented experience estimating or supervising residential or auto repair, verifiable licensure in a related trade (roofing, electrical, HVAC, structural, etc.), or a recognized industry certification such as IICRC, RPA, or equivalent. This captures the intended pool of qualified practitioners without creating a standard that cannot be applied consistently.
VII. Summary of Recommended Revisions
- Add a definition of “amount of loss” consistent with existing Texas case law, confirming that scope and methodology disputes are eligible for appraisal when intertwined with valuation.
- Revise the demand deadline in § 5.9803(a) to run from the later of one year after coverage acceptance or 180 days after adjustment impasse, with a good-cause extension option and an explicit provision addressing coverage denials.
- Revise § 5.9803(b)(5) to define “issued,” cap umpire replacements at two with mandatory court appointment thereafter, and clarify when the original umpire’s authority ends.
- Shorten the default appraisal timeline to approximately 195 days with good-cause extensions available on joint application.
- Replace the undefined “general contractor” qualification with a functional, experience-based standard tied to verifiable credentials or documented trade experience.
UCP appreciates TDI’s work on this rulemaking. We recognize that translating a broadly worded statute into operational rules is not a simple task, and we do not raise these concerns as criticism of the effort. We raise them because getting this right matters. Done well, the rules implementing SB 458 can give Texas policyholders a real, workable alternative to litigation. We are available to provide additional information, participate in any informal working group, or submit supplemental comments as the process develops.
Respectfully submitted,