88R1248 CJD-F     By: Jetton H.B. No. 597       A BILL TO BE ENTITLED   AN ACT   relating to an appraisal procedure for disputed losses under   certain property and casualty insurance policies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle A, Title 10, Insurance Code, is amended   by adding Chapter 1813 to read as follows:   CHAPTER 1813. APPRAISAL PROCEDURES   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 1813.001.  APPLICABILITY OF CHAPTER. (a) This chapter   applies only to an insurer writing a property or casualty insurance   policy, including the FAIR Plan Association, the Texas Automobile   Insurance Plan Association, a Lloyd's plan, a reciprocal or   interinsurance exchange, a farm mutual insurance company, and a   county mutual insurance company.          (b)  This chapter does not apply to the Texas Windstorm   Insurance Association.          Sec. 1813.002.  RULES. The commissioner may adopt rules   necessary to implement this chapter.          Sec. 1813.003.  REQUIRED POLICY PROVISION: APPRAISAL   PROCEDURE. An insurance policy described by Section 1813.001 must   contain an appraisal procedure that complies with this chapter.   SUBCHAPTER B. APPRAISAL PROCEDURES          Sec. 1813.051.  APPRAISAL DEMAND. If the policyholder and   insurer fail to agree to the amount of a loss covered by the policy,   the policyholder or insurer may provide a written demand for an   appraisal to the other party.          Sec. 1813.052.  SELECTION OF APPRAISERS. Not later than the   20th day after the date an appraisal demand is provided under   Section 1813.051, the policyholder and insurer shall each:                (1)  select a competent appraiser; and                (2)  provide written notice to the other party of the   appraiser's identity.          Sec. 1813.053.  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   1813.052.          (b)  The appraisers may extend the deadline described by   Subsection (a) for a period not to exceed 60 days on agreement by   the appraisers, policyholder, and insurer.          (c)  If the appraisers agree on the amount of the loss:                (1)  the appraisers shall provide written notice of the   agreement to the policyholder and insurer; and                (2)  the agreed amount is set as the amount of the loss.          (d)  If the appraisers fail to agree on the amount of the   loss, the appraisers shall select a competent and impartial umpire.     If the appraisers do not agree on an umpire before the 20th day   after the deadline for the appraisers to determine the amount of the   loss under this section, a judge of a court in the county in which   the policyholder resides shall select the umpire on the request of   the policyholder or insurer.          (e)  After the umpire is selected under Subsection (d), the   appraisers shall provide written notice to the umpire that   includes:                (1)  the amount each appraiser sets for the loss; and                (2)  any supporting documentation.          Sec. 1813.054.  APPRAISAL SELECTION BY UMPIRE. (a)  The   umpire shall determine the amount of the loss not later than the   30th day after the date the umpire receives the notice described by   Section 1813.053(e) by selecting one of the amounts submitted to   the umpire.          (b)  The umpire may extend the deadline described by   Subsection (a) for a period not to exceed 60 days on agreement by   the appraisers, policyholder, and insurer.          (c)  On deciding on the amount of the loss, the umpire shall   provide a written determination to the policyholder and insurer   that:                (1)  sets the amount of the loss; and                (2)  is signed by the umpire and the appraiser whose   appraisal amount is selected by the umpire.          (d)  A determination provided under Subsection (c) does not   prevent either party from pursuing its rights under the policy or   law.          Sec. 1813.055.  APPRAISAL EXPENSES. (a) Except as provided   by Subsection (c), the party selecting an appraiser shall pay that   appraiser.          (b)  Except as provided by Subsection (c), the policyholder   and insurer shall equally divide and pay the umpire's expenses, as   applicable, and all other appraisal expenses.          (c)  If at the end of the appraisal process the amount of the   loss is determined to be at least $1 more than the amount of the   insurer's proposed undisputed loss statement, the insurer shall   refund the policyholder's reasonable expenses incurred as a result   of the appraisal.          Sec. 1813.056.  EFFECT OF APPRAISAL. (a)  The appraisal does   not affect any applicable policy terms, including deductibles.          (b)  The appraisal procedure provided by this chapter is   intended to function as a liquidated damages clause, and the use of   the procedure 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.          SECTION 2.  Chapter 1813, Insurance Code, as added by this   Act, applies only to an insurance policy delivered, issued for   delivery, or renewed on or after January 1, 2024.          SECTION 3.  This Act takes effect September 1, 2023.