How Do the Texas Mandatory Binding RTA Rules Affect State Farm Policy Holders?

by Robert L. McDorman

Dear Mr. McDorman,

I own and operate a collision facility in East Texas. Thank you and all others who have worked diligently these past eight years to secure motor vehicle mandatory appraisal rights for the insureds in Texas. It is my understanding this went into effect in September and will be a requirement for every auto insurance policy beginning in January. Over the past several years, many of my clients who have State Farm insurance have had to pay a significant difference between their actual repair bill and what State Farm claimed they owed for the repair, with no rights to invoke appraisal to contest the short pay. It is my understanding sometime around 2017, State Farm removed their policy holders’ right to invoke appraisal for repair procedure disputes. With the passing of the Mandatory Appraisal Bill, I assume State Farm will now have to rewrite their motor vehicle policy to include a Right to Appraisal for motor vehicle repair procedure disputes, but can you please confirm?

Thank you for your comments and questions. Yes, this is correct on all counts. The Texas Mandatory Appraisal Rights Bill SB 458 went into effect on September 1, 2025. The policies issued or renewed on or after January 1, 2026 must include a mandatory Right to Appraisal (RTA). So yes, I can confirm that with the passing of SB 458, all Texas motor vehicle policies are required to have an appraisal process for both repair and total loss disputes between the insurer and the policy holder, including State Farm. 

The Mandatory Appraisal Rights Bill is currently in the rule making and appraiser/umpire requirements phase. As we wrote last month, Auto Claim Specialists and many others have turned in public comments to the Texas Department of Insurance (TDI) addressing their informal working draft of the rules and criteria. We are truly thankful for TDI’s work on these rules and appreciate that the residential property and auto appraisal processes have been somewhat separated to allow for the quicker resolution of auto claims. We look forward to seeing the final rules and appraiser/umpire criteria along with the punishment guidelines when one of the rules is broken. In my professional opinion, the tougher the rules and the bigger the fines when a rule is broken, the fairer and more efficient the appraisal process will be for all interested parties. 

For the Mandatory Appraisal Bill rule making and appraiser/umpire criteria phase now under review and in process, Commissioner Brown must adopt rules related to the period for appraisal, which is critical to the process. Equally critical are the qualifications and selection criteria for appraisers and umpires involved in the appraisal process which were also addressed in our comments related to the working draft. As I have stated several times, we have done an excellent job making legislators problem-aware to give Commissioner Brown the backing she needs for adapting rules and requirements. We now must make her solution- aware. I am confident with the right information and data, she will set the correct rules and qualifications in place for motor vehicle loss disputes. I have complete faith in her to do this.

As an insured citizen in Texas, I will do everything in my power to educate my fellow Texans about their legal Right to Appraisal when a dispute arises between them and their insurer. These under-indemnification issues on motor vehicle claims are harmful to Texans and can be detoured or stopped with widespread consumer awareness.

As I have spoken about and written about for many years, the under-indemnification in repair procedure and total loss claims in Texas is rampant. Most of the estimates and supplements we see for repair claims have many overlooked (by design) safety and OEM-required operations needed to restore the loss vehicle to its pre-loss condition to the best of one’s human ability. Now, with the passing of SB 458, when a dispute arises over the loss on a motor vehicle repair claim, there will be a binding Appraisal Clause in the policy allowing these disputes to be turned over to industry professionals to determine the loss.

The spirit of the Appraisal Clause is to resolve loss disputes fairly and to do so in a timely and cost-effective manner by unbiased industry qualified appraisers and umpires. Invoking the Appraisal Clause removes the inexperienced and biased carrier appraisers and claims handlers from the process, undermining their management’s many tricks to undervalue the loss settlement and under-indemnify the insured. Through the Appraisal Clause, loss disputes can be resolved relatively quickly, economically, equitably and amicably by unbiased, experienced, independent third-party appraisers as opposed to more costly and time-consuming methods such as mediation, arbitration and litigation. 

In today’s world, regarding motor vehicle insurance policies, frequent changes in claim management and claim handling policies and non-standardized GAP Addendums, we have found it is always in the best interest of the insured or claimant to have their proposed insurance settlement reviewed by an expert before accepting. There is never an upfront fee for Auto Claim Specialists to review a motor vehicle claim or proposed settlement and give their professional opinion as to the fairness of the offer.

Please call me should you have any questions relating to the policy or covered loss. We have most insurance policies in our library. Always remember that a safe repair is a quality repair, and quality equates to value. Thank you for your question and look forward to any follow-up questions that may arise.

Sincerely,

Robert L. McDorman

Want more? Check out the December 2025 issue of Texas Automotive!