The Texas Appraisal Clause
Your right to dispute a low valuation through independent experts.
Reviewed by Matthew Lynch — Texas Total Loss · Last reviewed September 4, 2026
When an insurance company declares your vehicle a total loss, they make a settlement offer based on their calculation of the vehicle's "Actual Cash Value" (ACV). But what happens when that offer is thousands of dollars less than what it will cost to replace your vehicle?
You do not have to accept their first offer or argue endlessly with an adjuster. Your insurance policy likely contains a provision designed for exactly this situation: The Appraisal Clause.
What is the Appraisal Clause?
The appraisal clause is a mechanism in an insurance policy that allows either the policyholder or the insurance company to demand a binding, independent valuation of the loss when they cannot agree on the amount.
It removes the valuation decision from the hands of the adjuster and places it in the hands of objective professionals.
How Appraisal Works
- Demand: Either party invokes the appraisal clause in writing.
- Appraisers Chosen: You hire a competent, independent appraiser. The insurance company hires their own independent appraiser.
- Umpire Selected: The two appraisers mutually agree on a neutral third party called an "Umpire."
- Evaluation: The two appraisers independently evaluate the vehicle's value. If they agree on the amount, that amount becomes binding.
- Umpire Decision: If the appraisers cannot agree, they submit their differences to the Umpire. A decision agreed to by any two of the three (your appraiser, their appraiser, and the Umpire) sets the binding value of the vehicle.
Amount of Loss vs. Coverage
Appraisal determines only the amount of loss—what the vehicle was actually worth right before the accident. It does not decide questions of coverage, liability, or who caused the accident. If the insurance company denies your claim entirely, appraisal is not the tool to force them to pay.
First-Party vs. Third-Party Claims
The appraisal clause is a contractual right found in your insurance policy (a first-party claim). If you are filing against the at-fault driver's insurer (a third-party claim), that policy’s appraisal provision generally is not your contractual right. Learn more about first-party and third-party total-loss claims.
Many Texas drivers facing a low third-party offer choose to file under their own collision coverage specifically to gain access to the appraisal clause, allowing their insurance company to pursue the at-fault driver later (subrogation).
Costs of Appraisal
The policyholder pays for their own appraiser, and the insurance company pays for theirs. If an Umpire is needed, the cost of the Umpire is split equally between you and the insurance company. This means it only makes sense to invoke appraisal if you expect the increase in valuation to exceed the costs of the process.
Deadlines and Duties
Timing and duties depend on the policy language, applicable regulations, and claim circumstances. Review the appraisal provision before demanding appraisal, disposing of the vehicle, or signing claim documents. Do not rely on a general deadline that may not match your policy.
Texas Insurance Code Chapter 1813
Historically, some insurers removed the appraisal clause from their Texas policies. Recently, Texas passed legislation (SB 458) creating Chapter 1813, which makes appraisal a mandatory right in auto policies delivered, issued, or renewed after specific dates. Learn more about Chapter 1813.