USA – TEXAS Trends and Developments Contributed by: Rodrigo (Diego) Garcia Jr. and Kolby J. Keller, Thompson, Coe, Cousins & Irons, LLP
appraisal provision of the policy, in plain language in ten-point type. By requiring this provision in the coverage letter, it is informing insureds of their option to invoke appraisal should they disagree with the coverage position and/or payment made under the policy for covered damage. • The most important and biggest proposed change to how appraisal functions are the fixed timelines. The new timelines are designed to promote a faster and more efficient appraisal process, and to avoid potential abuses of the appraisal process. • The first proposed deadline is a one-year dead- line from the date the coverage position letter is sent to the insured. This means that either party has one year to invoke appraisal from the date the coverage determination is communicated. How- ever, there is an exception to this deadline for both parties. The exception stems from when a demand is made involving the claim. If a lawsuit is filed, the responding party has 30 days from the date of filing to demand appraisal, even if one year has passed. • If an appraisal demand is made in writing desig- nating an appraiser, the responding party has 20 days from the date of the demand to designate its appraiser. After both parties have designated an appraiser, the appraisers have 15 days after either: (i) the appraiser selection is complete; or (ii) the appraisers fail to agree within 120 days after the appraisal demand was made. • Should the parties need to seek a judicially appointed umpire, the parties must seek a judicial appointment in a county or district court where the property is located. This proposed change eliminates the race to the courthouse outside of where the property sits to seek an umpire appoint-
ment. There have been instances where a party will race to the Harris County Ancillary Court seeking an umpire appointment for a property that is not in Harris County. This proposed change seeks to eliminate that possibility. On another note, this proposed change also allows for an umpire to be chosen from an independent vendor. For example, the policy may include an umpire who may be cho- sen from AAA or another vendor that offers umpire services. Now, should an umpire be appointed through the judicial system, the requesting party must give at least ten days’ notice identifying the county and court where the request is being made, and provide a copy of the request. • The appraisers, as indicated earlier, must attempt to agree with each other within 120 days from the date of the appraisal demand. Should the apprais- ers not agree within that timeframe and an umpire is needed, the umpire must issue an award no later than 240 days after the date of the demand. Should the umpire fail to issue an award within 240 days of the demand, the umpire’s engage- ment automatically terminates on that day, and the appraisers are forced to choose a new umpire within 15 days. Ultimately, even though these changes have not been enacted, the proposed changes are a step in the right direction and will help residential property insurers and insureds in creating a streamlined appraisal process. Placing deadlines on appraisers and umpires should help to achieve awards in a faster, more effective manner. This proposed change should help to reduce exposure under Texas Insurance Code § 542.060 Prompt Payment of Claims Act and, more importantly, curb the abuses in the appraisal process.
360 I NSURANCE L I T IGATI O N 2026
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