Appraisal is supposed to be the fast, practical way to settle a fight over how much a property loss is worth. Each side picks an appraiser, the two appraisers pick an umpire, and any two of the three set the amount of loss. The whole system rests on one assumption: that the people on the panel are there to measure the damage, not to win for whoever is paying them.
That assumption often fails. Carriers regularly name appraisers from the independent adjusting firms and engineering firms that depend on them for a steady stream of work. Some policyholder-side appraisers work on a percentage of whatever the award turns out to be. This article explains what the "competent," "independent," "disinterested," and "impartial" language in Texas policies means, how Texas courts have treated claims of appraiser bias, and when a Texas appraisal award can be set aside. The rules apply to both sides, and anyone who uses appraisal should know them.
What appraisal is, and is not, in Texas
The Texas Supreme Court has enforced appraisal clauses since the 1800s. In State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), the Court explained that an appraisal clause binds the parties to have the amount of the loss decided in a particular way. It leaves questions of liability to the courts. The Court also held that appraisers must consider causation at least to some extent, because separating hail damage from wear and tear is part of measuring the loss. It also said trial courts have no discretion to ignore a valid appraisal clause entirely.
Appraisal is not arbitration. In In re Allstate County Mutual Insurance Co., 85 S.W.3d 193 (Tex. 2002), the Court explained the difference: arbitration decides the parties' rights and liabilities, while appraisal decides only the amount of the loss. Appraisal is less formal and has fewer procedural protections than arbitration. That is exactly why the neutrality of the people doing it matters so much.
The words in your policy control
Texas courts start with the policy language, and the language varies from form to form. A few examples:
- The State Farm policy in Johnson required each side to "select a competent, disinterested appraiser" and required the appraisers to "select a competent, impartial umpire."
- The TDI-prescribed Homeowners Form A requires each side to select "a competent, independent appraiser" and says each party pays its own appraiser.
- Other company forms use "competent and impartial" for both appraisers and umpires.
These words are not interchangeable. Competent goes to skill: can this person identify damage and price the repair? Independent, in the words of the Gardner court discussed below, means the appraiser is "unbiased and free of control to arrive at their own evaluation of the loss." Disinterested and impartial go to whether the person has a stake in the outcome or leans toward one side.
The exact wording can decide the dispute. In Texas Farm Bureau Casualty Insurance Co. v. Sampley, No. 07-13-00151-CV (Tex. App.—Amarillo May 26, 2015) (mem. op.), the policy (an auto policy) required only a "competent" appraiser. The parties agreed that the insured's appraiser, who worked for the body shop that repaired the vehicle, was not disinterested. The court of appeals still declined to read a "disinterested" requirement into a policy that did not contain one, and it affirmed the trial court's refusal to remove him. When a policy does require a disinterested appraiser, the consequences can be serious. The Texas Supreme Court in Johnson described its 1919 decision in Delaware Underwriters v. Brock, 211 S.W. 779 (Tex. 1919), as holding that an insurer's appointment of a biased appraiser waived its right to appraisal.
Appraisers with ties to the carrier
Two Houston appellate decisions address appraisers with business ties to the carrier.
In Gardner v. State Farm Lloyds, 76 S.W.3d 140 (Tex. App.—Houston [1st Dist.] 2002), the homeowners challenged State Farm's appraiser, who worked for an engineering firm with a long relationship with State Farm. That firm had written hail-damage training materials for State Farm, consulted on its hailstorm evaluations, and received payments from State Farm companies over a period of years. The court held this was not enough. It relied on older Texas authority holding that a preexisting relationship between an insurer and its appraiser does not show bias without some act or conduct showing that the appraiser served the company's interest "as a partisan would." It noted that there was no evidence State Farm directed its appraiser to reach any conclusion.
In Franco v. Slavonic Mutual Fire Insurance Ass'n, 154 S.W.3d 777 (Tex. App.—Houston [14th Dist.] 2004, no pet.), the carrier's appraiser had earlier been hired through the carrier's adjusting firm to inspect the property and report on the damage. The policy required a "competent and disinterested" appraiser. The court held that "the showing of a pre-existing relationship, without more, does not support a finding of bias." It pointed out that there was no evidence the carrier controlled the appraiser, that he had a financial interest in the claim, or that his earlier inspection affected his valuation.
So the honest answer under current Texas case law is this: working regularly for a carrier, or its adjusting firm, does not by itself disqualify an appraiser. The challenger needs evidence of something more.
Appraisers paid on contingency
A different Houston court reached a different result when the appraiser's pay depended on the size of the award. In General Star Indemnity Co. v. Spring Creek Village Apartments Phase V, Inc., 152 S.W.3d 733 (Tex. App.—Houston [14th Dist.] 2004), the policy required each side to select "a competent and impartial appraiser." The insured's appraiser was paid a percentage of the recovery, and his percentage went up if the award exceeded $2 million. The court held that "an appraiser with a financial interest in the outcome of the appraisal is not impartial." It reversed the judgment that had enforced the award because General Star had raised a fact issue on impartiality. When the case was tried again, the jury found that the insured's appraiser was not impartial, and the court of appeals noted that the award was therefore no longer binding. Spring Creek Village Apartments Phase V, Inc. v. General Star Indemnity Co., 261 S.W.3d 206 (Tex. App.—Houston [14th Dist.] 2008).
Policyholders, public adjusters, and contractors should take that seriously. If your policy requires an impartial or disinterested appraiser, an appraiser paid on a percentage of the award is exposed to challenge, and the whole award may be at risk. An hourly or flat fee avoids that problem.
When a Texas appraisal award can be set aside
Texas courts presume appraisal awards are valid. Franco says courts will indulge "every reasonable presumption" to sustain an award, and the party trying to avoid it has the burden of proof. Texas courts recognize three situations in which an award may be disregarded:
- the award was made without authority;
- the award was the result of fraud, accident, or mistake; or
- the award was not made in substantial compliance with the terms of the policy.
Bias usually falls under the third category. If the policy required an impartial or disinterested appraiser and one side's appraiser was not, the award may not comply with the policy. That was the theory in General Star. The Supreme Court made a related point in Johnson: "If an appraisal is not an honest assessment of necessary repairs, that can be proved at trial and the award set aside."
These challenges are hard to win and depend heavily on the facts. It is far better to raise a qualification problem at the start, in writing, before the panel does its work, than to attack an award afterward.
TWIA claims follow a statute
Claims under Texas Windstorm Insurance Association policies are governed by statute and rule, not just policy language. Under Texas Insurance Code § 2210.574, a TWIA appraisal decision on an accepted claim is binding and generally "not appealable or otherwise reviewable." If the two appraisers cannot agree on an umpire, the commissioner selects one from a roster kept by the Texas Department of Insurance. Either side may, within two years, file suit in the county where the loss occurred to vacate the decision and start over. The grounds include corruption, fraud, or other undue means; prejudice from "evident partiality by an appraisal umpire" or corruption or misconduct by an appraiser or umpire; and an appraiser or umpire who exceeded their powers or refused to consider material evidence.
TDI's rules add conflict-of-interest standards. 28 Tex. Admin. Code § 5.4212 lists potential conflicts for TWIA appraisers. The list includes being a current employee or contractor of an insurance company or public adjusting company, having adjusted the loss or acted as public adjuster on it, and having any other direct or indirect interest, financial or otherwise, that substantially conflicts with the appraiser's duties. Section 5.4213 requires an appraiser to disclose potential conflicts to both parties no later than the fifth day after being hired and before starting work. Section 5.4214 sets umpire qualifications and lists disqualifying conflicts. Anyone handling a TWIA appraisal should read these rules first.
Practical steps for either side
- Read the appraisal clause first. Note whether it says competent, independent, disinterested, or impartial, and whether those words apply to appraisers, the umpire, or both.
- Ask for disclosure in writing. Ask the other side's appraiser, and any proposed umpire, about prior involvement in the claim, how they are paid, and how much work they get from each party or firm involved.
- Object promptly and specifically. Put qualification objections in writing before the panel starts. Explain the facts and which policy language they violate.
- Check your own appraiser. If the policy requires impartiality or disinterest, avoid percentage-based pay.
- Keep the umpire truly neutral. If the appraisers cannot agree, most policies allow a court to appoint the umpire. Follow the policy's procedure exactly.
Key takeaways
- Texas enforces appraisal clauses, but appraisal decides only the amount of loss, not liability.
- Qualification requirements come from the policy. "Competent," "independent," "disinterested," and "impartial" mean different things, and a Texas court may decline to add a requirement the policy does not contain.
- Under Gardner and Franco, a preexisting business relationship with the carrier, without more, has not been enough to prove bias.
- Under General Star, an appraiser with a financial interest in the outcome, such as a percentage fee, is not impartial. That rule applies to policyholder-side appraisers too.
- An award can be set aside if it was made without authority, resulted from fraud, accident, or mistake, or did not substantially comply with the policy. Courts presume awards are valid.
- TWIA appraisals have their own statutory grounds for vacating an award and their own TDI conflict-of-interest and disclosure rules.
If you are a policyholder facing an appraisal dispute, or a public adjuster, appraiser, or attorney with a question about appraiser qualifications in a Texas claim, contact The Claim Attorney for a free case review. Attorneys interested in co-counsel on Texas property insurance matters are welcome to reach out.
Related reading
- Post-Appraisal Cosmetic Damage Defenses in Texas: Coverage or Scope?
- Texas Property Insurance Claim and Lawsuit Deadlines Explained
- Roof Waste and Dump Fees: Proving a Texas Roof Estimate
Adapted for Texas law in September 2026 from an article Michael Bowman originally published on LinkedIn.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws change, and results depend on the facts of each case and the language of each policy. Michael P. Bowman is licensed to practice law in Texas and Alabama only. Responsible attorney: Michael P. Bowman, Law Office of Michael P. Bowman PLLC, Austin, Texas.
