HB345 - Relating to an appraisal process for disputed losses under residential property insurance policies.

  89R1891 CJD-F     By: Perez of Harris H.B. No. 345       A BILL TO BE ENTITLED   AN ACT   relating to an appraisal process for disputed losses under   residential property insurance policies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle D, Title 10, Insurance Code, is amended   by adding Chapter 2009 to read as follows:   CHAPTER 2009. APPRAISAL PROCESS FOR RESIDENTIAL PROPERTY INSURANCE   SUBCHAPTER A. GENERAL PROVISIONS           Sec.   2009.001.     APPLICABILITY OF CHAPTER. (a)   This chapter   applies only to an insurer writing a residential property insurance   policy, including:                 (1)  a capital stock insurance company;                 (2)  a mutual insurance company;                 (3)  a county mutual insurance company;                 (4)  a Lloyd's plan;                 (5)  a reciprocal or interinsurance exchange;                 (6)  a farm mutual insurance company;                 (7)     an eligible surplus lines insurer if this state is   the insured's home state as defined by Section 981.002; and                 (8)  the FAIR Plan Association.           (b)  This chapter does not apply to:                 (1)  the Texas Windstorm Insurance Association; or                 (2)  a commercial insurance policy.           Sec.   2009.002.     RULES. The commissioner may adopt rules   necessary to implement this chapter.           Sec.   2009.003.     REQUIRED POLICY PROVISION: APPRAISAL   PROCESS. (a)   Any appraisal provision contained in an insurance   policy described by Section 2009.001 must comply with this chapter.           (b)     The requirements of this chapter control over terms of   an insurance policy and other law only with respect to the specific   issues addressed in this chapter. All other terms and conditions of   the appraisal process remain subject to the terms of the insurance   policy and applicable law.             (c)     The provisions of this chapter are not the sole   provisions that may be included in an appraisal process provided in   an insurance policy. Subject to any other provision of law, a policy   may include any other provision not in direct conflict with this   chapter.           (d)     This chapter does not alter or provide an exception to   the prompt payment of claims deadlines under Subchapter B, Chapter   542.   SUBCHAPTER B. APPRAISAL PROCESS           Sec.   2009.051.     APPRAISAL DEMAND. (a) If the policyholder   and insurer fail to agree to the amount of loss covered by the   policy, the policyholder or insurer may provide a written demand   for appraisal to the other party.           (b)     The policyholder may not demand appraisal after the   policyholder files a lawsuit asserting the claim that is the basis   for the appraisal demand.           (c)     The insurer may not demand appraisal after filing the   insurer's original answer to the lawsuit.           (d)     The insurer may incorporate a demand for appraisal with   the insurer's original answer to the lawsuit.           (e)     If the policyholder files a lawsuit and the insurer   subsequently demands appraisal, the lawsuit may be abated until the   appraisal process is complete, provided that the insurer has not:                 (1)  denied the claim; or                 (2)     reserved the right to dispute coverage following   the appraisal process.           Sec.   2009.052.     SELECTION OF APPRAISERS. Not later than the   20th day after the date an appraisal demand is provided under   Section 2009.051, the policyholder and insurer shall each:                 (1)  select a competent and impartial appraiser; and                 (2)     provide written notice to the other party of the   appraiser's identity.           Sec.   2009.053.     APPRAISAL OF LOSS BY APPRAISERS; SELECTION   OF UMPIRE. (a)   The appraisers shall appraise the loss that is the   subject of the appraisal not later than the 30th day after the date   both the policyholder and insurer have complied with Section   2009.052.           (b)     The appraisers may extend the deadline described by   Subsection (a) for a period not to exceed 30 days on written   agreement by the appraisers, policyholder, and insurer.           (c)  If the appraisers agree on the amount of loss:                 (1)     the appraisers shall issue their award and provide   written notice of the award to the policyholder and insurer; and                 (2)     the agreed amount as stated in the appraisal award   is the amount of loss.           (d)     If the appraisers fail to agree on the amount of loss,   the appraisers shall select a competent and impartial umpire.   If   the appraisers do not agree on an umpire after the 20th day after   the deadline for the appraisers to determine the amount of loss   under this section, the umpire must be selected:                 (1)     by a policy provision, if applicable, that   provides for the method of selecting an umpire; or                 (2)     on written request by either party to a court   described by Subsection (e).           (e)     A policy provision may provide that a competent and   impartial umpire may be selected by a judge of a district court,   county court at law, or constitutional county court in the county in   which the policyholder resides or where the property is located.           (f)     A party requesting court appointment of an umpire must   provide the other party with 10 days' written notice of the intent   to submit the request.   The appointment may not be made on an ex   parte basis without both parties having an opportunity to appear   before the court.           (g)     After the umpire is selected under Subsection (d) or   (e), each appraiser shall provide written notice to the umpire and   the other appraiser that includes:                 (1)     the appraiser's determination as to the amount of   loss;                 (2)  any supporting documentation; and                 (3)     an itemized list of the disputed differences   between the appraisers regarding the amount of loss.           Sec.   2009.054.     AMOUNT OF LOSS DETERMINATION BY UMPIRE. (a)     The umpire shall determine the amount of loss by selecting:                 (1)     one of the amounts of loss submitted to the umpire;   or                 (2)     an amount in between the two amounts submitted to   the umpire.           (b)     The umpire must select an amount under Subsection (a)   not later than the 30th day after the date the umpire receives the   submissions of both appraisers.           (c)     The umpire may extend the deadline described by   Subsection (b) for a period not to exceed 30 days on written   agreement of the appraisers, policyholder, and insurer.           (d)     On deciding on the amount of loss, the umpire shall   issue a written appraisal award that:                 (1)  states the amount of loss; and                 (2)  is signed by the umpire and at least one appraiser.           (e)     The umpire may not alter any valuation or any portion of   the amount of loss on which the appraisers agree.           (f)     An appraisal award issued under Subsection (d) does not   prevent either party from pursuing all other rights under the   policy or law.           Sec.   2009.055.     APPRAISAL EXPENSES; TERMINATION OF   APPRAISAL PROCESS.   (a)   The policyholder and insurer shall equally   divide and pay the umpire's expenses, as applicable, and all other   appraisal expenses, except that each party shall pay their own   appraiser.           (b)     If a party's appraiser materially fails to comply with   the deadlines under this chapter and the other party makes a good   faith effort to address the failure and continue the appraisal   process, the other party may terminate the appraisal process and   seek recovery of the party's reasonable hourly appraiser expenses   incurred in the appraisal process.           (c)     If the umpire materially fails to comply with the   deadlines under this chapter after making a good faith effort to   address the failure and continue the appraisal process, the   policyholder, the insurer, or both may terminate the appraisal   process and seek recovery of their reasonable hourly appraiser   expenses from the umpire.           (d)     If an appraisal process is terminated under Subsection   (b), the party employing the noncompliant appraiser may not invoke   the appraisal process for the dispute at issue. However, the other   party may invoke the appraisal process for the dispute at issue.             (e)     If an appraisal process is terminated under Subsection   (c), the policyholder or the insurer may invoke the appraisal   process for the dispute at issue.           (f)     The appraisers for the policyholder and the insurer and   the umpire must be paid on an hourly or flat-fee basis, using a   reasonable hourly rate and based on the estimated number of hours   reasonably necessary to complete the appraisal process. The   appraisers for the policyholder and insurer may not be paid on any   basis other than an hourly or flat-fee basis, including a   contingent or success basis.           Sec.   2009.056.     EFFECT OF APPRAISAL. (a)   The appraisal does   not affect any applicable policy terms.           (b)     The amount of loss determined by the appraisal process   under this chapter is binding as to the policyholder and the   insurer.   The use of the process is not a condition precedent to   bringing an action for a violation of this code, for a breach of   contract, or for any other common-law or statutory remedy.           Sec.   2009.057.     EXTENSION OF DEADLINES. If the disputed   loss is the result of a weather-related catastrophe or major   natural disaster, as defined by the commissioner, the appraisal   deadlines imposed under Sections 2009.052 and 2009.053(a) and (b)   are extended for an additional 30 days.          SECTION 2.  (a)  Chapter 2009, Insurance Code, as added by   this Act, applies only to an insurance policy delivered, issued for   delivery, or renewed on or after January 1, 2026.          (b)  An insurance policy form providing for an appraisal   process that is in use on September 1, 2025, and otherwise compliant   with Chapter 2009, Insurance Code, as added by this Ac [Text truncated for display. Full text available on Congress.gov.]