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A BILL TO BE ENTITLED
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AN ACT
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relating to an appraisal procedure for disputed losses under |
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certain property and casualty insurance policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 10, Insurance Code, is amended |
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by adding Chapter 1813 to read as follows: |
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CHAPTER 1813. APPRAISAL PROCEDURES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1813.001. APPLICABILITY OF CHAPTER. (a) This chapter |
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applies only to an insurer writing a property or casualty insurance |
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policy, including the FAIR Plan Association, the Texas Automobile |
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Insurance Plan Association, a Lloyd's plan, a reciprocal or |
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interinsurance exchange, a farm mutual insurance company, and a |
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county mutual insurance company. |
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(b) This chapter does not apply to the Texas Windstorm |
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Insurance Association. |
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Sec. 1813.002. RULES. The commissioner may adopt rules |
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necessary to implement this chapter. |
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Sec. 1813.003. REQUIRED POLICY PROVISION: APPRAISAL |
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PROCEDURE. An insurance policy described by Section 1813.001 must |
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contain an appraisal procedure that complies with this chapter. |
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SUBCHAPTER B. APPRAISAL PROCEDURES |
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Sec. 1813.051. APPRAISAL DEMAND. If the policyholder and |
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insurer fail to agree to the amount of a loss covered by the policy, |
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the policyholder or insurer may provide a written demand for an |
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appraisal to the other party. |
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Sec. 1813.052. SELECTION OF APPRAISERS. Not later than the |
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20th day after the date an appraisal demand is provided under |
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Section 1813.051, the policyholder and insurer shall each: |
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(1) select a competent appraiser; and |
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(2) provide written notice to the other party of the |
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appraiser's identity. |
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Sec. 1813.053. APPRAISAL OF LOSS BY APPRAISERS; SELECTION |
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OF UMPIRE. (a) The appraisers shall appraise the loss that is the |
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subject of the appraisal not later than the 30th day after the date |
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both the policyholder and insurer have complied with Section |
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1813.052. |
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(b) The appraisers may extend the deadline described by |
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Subsection (a) for a period not to exceed 60 days on agreement by |
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the appraisers, policyholder, and insurer. |
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(c) If the appraisers agree on the amount of the loss: |
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(1) the appraisers shall provide written notice of the |
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agreement to the policyholder and insurer; and |
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(2) the agreed amount is set as the amount of the loss. |
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(d) If the appraisers fail to agree on the amount of the |
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loss, the appraisers shall select a competent and impartial umpire. |
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If the appraisers do not agree on an umpire before the 20th day |
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after the deadline for the appraisers to determine the amount of the |
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loss under this section, a judge of a court in the county in which |
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the policyholder resides shall select the umpire on the request of |
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the policyholder or insurer. |
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(e) After the umpire is selected under Subsection (d), the |
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appraisers shall provide written notice to the umpire that |
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includes: |
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(1) the amount each appraiser sets for the loss; and |
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(2) any supporting documentation. |
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Sec. 1813.054. APPRAISAL SELECTION BY UMPIRE. (a) The |
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umpire shall determine the amount of the loss not later than the |
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30th day after the date the umpire receives the notice described by |
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Section 1813.053(e) by selecting one of the amounts submitted to |
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the umpire. |
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(b) The umpire may extend the deadline described by |
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Subsection (a) for a period not to exceed 60 days on agreement by |
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the appraisers, policyholder, and insurer. |
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(c) On deciding on the amount of the loss, the umpire shall |
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provide a written determination to the policyholder and insurer |
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that: |
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(1) sets the amount of the loss; and |
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(2) is signed by the umpire and the appraiser whose |
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appraisal amount is selected by the umpire. |
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(d) A determination provided under Subsection (c) does not |
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prevent either party from pursuing its rights under the policy or |
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law. |
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Sec. 1813.055. APPRAISAL EXPENSES. (a) Except as provided |
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by Subsection (c), the party selecting an appraiser shall pay that |
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appraiser. |
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(b) Except as provided by Subsection (c), the policyholder |
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and insurer shall equally divide and pay the umpire's expenses, as |
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applicable, and all other appraisal expenses. |
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(c) If at the end of the appraisal process the amount of the |
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loss is determined to be at least $1 more than the amount of the |
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insurer's proposed undisputed loss statement, the insurer shall |
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refund the policyholder's reasonable expenses incurred as a result |
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of the appraisal. |
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Sec. 1813.056. EFFECT OF APPRAISAL. (a) The appraisal does |
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not affect any applicable policy terms, including deductibles. |
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(b) The appraisal procedure provided by this chapter is |
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intended to function as a liquidated damages clause, and the use of |
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the procedure is not a condition precedent to bringing an action for |
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a violation of this code, for a breach of contract, or for any other |
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common-law or statutory remedy. |
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SECTION 2. Chapter 1813, Insurance Code, as added by this |
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Act, applies only to an insurance policy delivered, issued for |
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delivery, or renewed on or after January 1, 2024. |
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SECTION 3. This Act takes effect September 1, 2023. |