The Texas insurance appraisal process, explained.
A plain-English walkthrough of the appraisal clause, umpire selection, cost sharing, and the Texas case law that shapes what a panel can and can't decide.
How the appraisal clause works
Almost every homeowners, commercial property, and dwelling policy sold in Texas contains an appraisal clause. When the insurer and the insured disagree about the amount of loss — not whether coverage exists, but how much the covered damage costs to repair — either side can invoke appraisal in writing. Each party selects a competent, disinterested appraiser. The two appraisers select a neutral umpire. Any two of the three (the two appraisers, or one appraiser and the umpire) sign a binding award that fixes the amount of loss.
Statutory vs contractual — Texas, Oklahoma, Colorado
In Texas, appraisal is contractual. It exists because the policy provides for it — no Texas statute forces private carriers to include appraisal. TWIA (Chapter 2210) has its own dispute mechanism. In Oklahoma, appraisal is likewise contractual and enforced under general contract principles. Colorado is contractual as well, with statutory bad-faith remedies (C.R.S. §§10-3-1115/1116) sitting alongside the appraisal process.
Who pays the umpire?
Standard policy language provides that each party pays its own appraiser, and the parties share the umpire's fee and other appraisal expenses equally — 50/50. Your appraiser is typically retained on an hourly basis against a retainer (roughly $250/hour depending on complexity and jurisdiction). Appraisers may not ethically work on a percentage of the award.
What a Texas panel can decide
Under State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), and reinforced in Tippett v. Safeco Ins. Co. of Ind. (5th Cir. 2023), appraisal panels can determine the amount of loss attributable to the covered peril — including allocating damage across slopes, elevations, and rooms. Pure coverage questions (does the policy cover flood at all?) still belong in court.
Frequently asked questions
A provision in most property policies that lets either party demand a binding valuation of the amount of loss when the parties disagree. Each side picks a competent, disinterested appraiser; the two appraisers pick an umpire; and any two of the three set the amount.
In Texas, appraisal is contractual — it exists because the policy says so, not because a statute compels it. TWIA policies (Chapter 2210) and certain flood policies have their own dispute procedures instead.
In almost every standard property policy, the umpire's fees and the shared appraisal expenses are split 50/50 between the insurer and the insured. Each party pays its own appraiser.
No. A qualified, disinterested appraiser cannot be paid a contingent share of the award. Appraisers are typically retained on an hourly basis against a retainer — commonly around $250/hour depending on complexity.
In Texas, yes — appraisal panels can and do decide the amount of loss attributable to the covered peril. State Farm Lloyds v. Johnson (Tex. 2009) and Tippett v. Safeco (5th Cir. 2023) confirm that separating covered from non-covered damage is part of the panel's job.
No. The Standard Flood Insurance Policy issued under the National Flood Insurance Program does not contain an appraisal provision and disputes must be handled through the NFIP claim and litigation process.
Ranges widely — 30 to 120 days is typical once the umpire is selected and both appraisers have inspected. Complex commercial or multi-building losses can take longer.
No. Appraisal resolves amount, not extra-contractual liability. In Texas, a timely full payment of an appraisal award generally cuts off certain §541/§542 damages, but does not immunize a carrier from bad-faith exposure in every case.
Ready to invoke appraisal?
Use our free fillable appraisal demand letter — signed by you, emailed straight to your carrier with the claim number in the subject line.
Open the Appraisal Demand tool