The Texas Supreme Court’s Latest Appraisal Ruling: What It Means for Policyholders
A groundbreaking decision by the Texas Supreme Court has reformed the manner in which insurance companies shall conduct the appraisal process: closing loopholes that allowed insurers to delay, deflect, or underpay valid claims. This decision is a victory for Texas’s homeowners, business owners, and industry professionals who depend on the fairness and transparency of claim handling.
SPJ Adjusting Services assists property owners through this ever-changing landscape and obtains correct, timely claim settlements.
What Is the Insurance Appraisal Process?
Most property insurance policies contain an appraisal process as an internal dispute resolution mechanism. It is designed to resolve disputes about the amount of loss, not coverage, without resorting to a lengthy courtroom battle.
Here’s how it typically works:
1. Each Party Chooses an Appraiser
The policyholder selects one appraiser, and the insurance company chooses another. These appraisers must be independent of each other and comment objectively about the claim.
2. A Neutral Umpire Intervenes if Necessary
If the two appraisers cannot agree on the value of the loss, they bring in a neutral umpire. Any agreement between one appraiser and the umpire becomes the final binding amount.
3. The Appraisal Award Becomes Binding
Both parties are bound by the accepted value and very often this helps to resolve disputes more expeditiously than if the matter went to litigation.
Theoretically, the process is fair.
In practice, some insurers prolonged or manipulated this to delay the payments or avoid claim obligations.
How Insurers Abused the Appraisal Process
Before the recent Texas Supreme Court ruling, some insurance companies used appraisal as a shield:
- Delaying payments by dragging out disputes
- Avoiding penalties for slow or unfair claims handling
- Using payment of the appraisal award as a way to dodge bad-faith allegations
This was especially problematic for policyholders, who often had to wait months or even years before receiving the compensation owed to them.
The Texas Supreme Court’s Ruling: A New Era of Accountability
The landmark decision directly addresses insurer abuse of the appraisal system and clarifies that:
1. Appraisal Is NOT a Substitute for Proper Claims Handling
The Court held that the payment of an appraisal award does not retroactively negate an insurer’s prior delays or bad-faith conduct. Insurers are still required to fairly and promptly investigate and adjust claims.
2. Insurers Can Face Penalties for Delays
If an insurer delays, does not communicate, or otherwise mishandles a claim-even if it ultimately pays the appraisal award-the policyholder can still pursue:
- Bad faith claims
- Statutory interest
- Attorney fees
- Additional damages
3. Policyholders are better protected.
This Judgment prevents insurers from wielding appraisal as a sword to insulate themselves from liability and preserves the right of policyholders to sue for unfair treatment.
Why these ruling matters for policyholders?
This decision strengthens the rights of property owners across Texas. Here’s what it means for you:
A Fairer Claims Process
Insurers now have to show good-faith claim handling from beginning to end.
Faster Payments
The ruling reinforces that insurer cannot use appraisal as an excuse to delay payment.
Stronger Legal Recourse
When an insurer mishandles your claim, you now have clearer grounds for seeking legal remedies-even after an appraisal.
Examples of how this ruling helps property owners:
Example 1
Your insurance company lowballs the value of your roof replacement and then takes several weeks to contact you, only to invoke appraisal. Under the new ruling, you can collect damages for that delay, even when they eventually pay the appraisal award.
Example 2
The water damage was underestimated, and the insurer refuses to acknowledge contractor estimates. Even if they drag this issue into appraisal to avoid making a payment, you can still claim statutory interest and penalties.
How SPJ Adjusting Services Supports You Through the Appraisal Process
Navigating an insurance dispute can be overwhelming especially when insurers don’t act in good faith. That’s where SPJ Adjusting Services makes a difference.
With over 12 years of specialized experience, we offer:
- High Value, Detailed Appraisals
Our assessments reflect true repair costs and industry-standard valuations.
- Professional Representation
We have handled both policyholder and carrier appraisals and have gained insight into how to approach complex disputes strategically.
- Guidance Aligned with the Latest Laws
We ensure your claim follows Texas standards, which include any new requirements inspired by recent court rulings.
- Certified Expertise You Can Trust
Our credentials include:
NFIP Flood Adjusting
IICRC Fire & Smoke Restoration (FSRT)
Haag Certified Inspector
Xactimate Level 3
Symbility Level 2
