St. Mary's Law Journal


Insurance appraisal is a contractually agreed process for resolving a disagreement between the insurance carrier and the policyholder about the amount of a loss under an insurance policy. Appraisal clauses have been a feature of insurance policies in Texas for well over a century. Old Texas cases were uniform to the effect that appraisal was a method to establish the “amount” of the loss under circumstances where coverage was not in dispute, but a recent line of cases has allowed insurers to escape liability for breach of contract, attorneys’ fees, statutory and common law “bad faith,” and even liability under the Texas Prompt Payment of Claims Act (PPCA), often irrespective of whether the evidence shows an insurer knowingly undervalued or underpaid the claim by a substantial amount when it originally investigated and adjusted the loss, or even if it could be shown that it did so in bad faith.

Given the scope of the defense now provided by appraisal, issues arising around appraisal have become a large point of focus in first-party coverage litigation in recent years, yielding a number of developing issues that have important effects on the parties’ rights. Taking into account the purposes of the appraisal clause, the intent behind the most recent Texas Supreme Court pronouncements on the subject, and the purpose of various consumer protection provisions of the Texas Insurance Code, this Article argues that courts should construe the process so as not to distort the claims process or vitiate the protections afforded to insureds by statute and over a century of common law.

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St. Mary's University School of Law


Katherine Spiser Rios