Get the fair value you deserve for your totaled vehicle in Texas

Texas regulates auto total-loss claims through three layered authorities: the binding appraisal mandate at Texas Insurance Code Chapter 1813 (enacted by SB 458, effective for policies issued or renewed on or after January 1, 2026), the prompt-payment regime at Chapter 542, and the general unfair-claims prohibitions at Tex. Ins. Code § 541.060. Chapter 1813 — Appraisal of Disputed Losses (SB 458). Every personal automobile insurance policy issued or renewed in Texas on or after January 1, 2026, must contain an appraisal provision providing a dispute resolution process to determine the amount of loss when that amount is in dispute between the policyholder and the insurer. Either the policyholder or the insurer may unilaterally demand appraisal. For auto policies, a demand for appraisal must be made within 120 days, and the two appraisers have 75 days to reach agreement before a neutral umpire is selected. The appraisal award is binding, except in cases of fraud, accident, or material mistake. The Texas Department of Insurance (TDI) is rulemaking under Chapter 1813 to specify how the appraisal process must be disclosed in policy forms and how it interacts with total-loss valuation disputes. Chapter 542, Subchapter B — Prompt Payment of Claims. Section 542.055 requires the insurer, within 15 days of receiving notice of a claim, to acknowledge receipt of the claim, request any information reasonably needed for the investigation, and begin investigating. Section 542.056 requires the insurer to notify the claimant in writing within 15 business days after receiving all requested investigation items whether the claim is accepted or rejected (30 days in arson cases). Section 542.057 requires the insurer to pay an accepted claim no later than the fifth business day after the date the acceptance notice is issued. Section 542.060 makes prompt-payment violations civilly actionable: a violating insurer is liable for the amount of the claim, plus interest at 18% per year on the unpaid amount, plus reasonable and necessary attorney's fees. § 541.060 — Unfair Claim Settlement Practices. Section 541.060(a) prohibits, among other things: misrepresenting a material fact or policy provision; failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement when liability has become reasonably clear; failing to provide a reasonable explanation of the basis for a denial or compromise offer; and refusing to pay a claim without conducting a reasonable investigation. Tex. Ins. Code Ch. 541, Subchapter D allows a claimant to recover actual damages, plus court costs and reasonable attorney's fees, plus up to three times actual damages for knowing violations. Texas does not impose a separate licensing requirement on a policyholder's appraiser invoked under the policy's appraisal clause.

Texas added Chapter 1813 in 2025 (SB 458, 89th Leg.) — effective January 1, 2026 — to overrule years of intermediate appellate law that had let some insurers refuse to negotiate appraisal in personal auto disputes. Pre-1813, Texas courts treated appraisal as a contractual remedy that depended entirely on whether the policy in front of the court contained an appraisal clause. Insurers had been quietly removing appraisal clauses from personal auto forms in Texas; SB 458 ended that practice prospectively for any policy issued or renewed on or after 1/1/2026. The broader bad-faith framework remains anchored in Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d 165 (Tex. 1987), which recognized the insurer's common-law duty of good faith and fair dealing in the handling of a first-party claim, and in Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), which clarified the interplay between the common-law duty and the Insurance Code's statutory unfair-claims regime. The combined result: a Texas policyholder facing an undervalued total-loss settlement on a post-1/1/2026 policy now has (1) a contractual right to binding appraisal under Chapter 1813, (2) a prompt-payment cause of action under Chapter 542 with 18% interest plus attorney's fees, and (3) an unfair-claims cause of action under § 541.060 with up to treble damages for knowing violations.