Payment of Appraisal Award Avoids Bad Faith Claim in Texas

Payment of Award is an Acceptance of Coverage

In an insurance-coverage case, the Court held that the insurer’s payment of the appraisal amount, which established the covered loss, precludes a claim that the insurer breached the policy by failing to pay the covered loss.

Justice Boyd issued a concurring and dissenting opinion explaining and clarifying the Supreme Court of Texas’ opinion in Oscar Ortiz v. State Farm Lloyds, No. 17-1048, Supreme Court of Texas (June 28, 2019).


Justice Boyd noted that the Supreme Court held that the insurer’s payment bars extracontractual bad-faith claims that seek damages totaling no more than the covered loss. The Court held that the insured may proceed on this claim in light of a concurrently issued decision in Barbara Techs. Corp. v. State Farm Lloyds, No. 17-0640, — S.W.3d — (Tex. June 28, 2019). There, in a similar factual context, the Court remands to the trial court for further proceedings to determine whether the insured’s claim is “invalid” and “should not be paid” or whether the insurer “is liable” under the policy. As explained in a separate opinion by Justice Boyd, in that case, he would hold that section .058 applies and section .060 does not, and that — regardless of which section applies — the insurer conceded the claim’s validity and its own liability by voluntarily and unconditionally paying the benefits claimed.

Thus, Justice Boyd would (had he been in the majority) remand solely to determine the amount of statutory interest and attorney’s fees the insurer owes the insured.


In this brief concurring and dissenting opinion Justice Boyd wisely pointed out that when an insurer accepts an appraisal award and pays that award it is clearly accepting that the loss presented by the insured was covered by its policy and the trial court had nothing to determine – since both parties allowed the appraisers to establish the amount of loss – interest and attorneys fees may need to be established and thing more. Liability for the loss was admitted when the award was paid.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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