Texas body shop laws: what insurers and shops must do

What it means in Texas

The insurer, its agents and adjusters can't tell your customer they must use a specific shop or one on a preferred list, and in a third-party claim the insurer can't require a particular shop. Referral fees are barred, and the insurer must give notice of the right to choose. A policy can limit shop choice only if the limit is on the face of the policy and the insured agreed in writing. The insurer only has to pay a reasonable amount.

A policy can limit shop choice only if the limit is shown on the face of the policy and the insured consents in writing (Tex. Ins. Code 1952.301 and 1952.307). Referral fees and unreasonable travel demands are also barred.

The law's own words

“state or suggest, either orally or in writing, to a beneficiary that the beneficiary must use a specific repair person or facility or a repair person or facility identified on a preferred list compiled by an insurer for the damage repair or parts replacement to be covered by the policy”

Tex. Ins. Code 1952.302, effective 4/1/2007

“In settling a liability claim by a third party against an insured for property damage claimed by the third party, an insurer may not require the third-party claimant to have repairs made by a particular repair person or facility”

Tex. Ins. Code 1952.301, effective 4/1/2007

“BY LAW, YOU HAVE THE RIGHT TO SELECT WHERE YOUR MOTOR VEHICLE IS REPAIRED AND THE PARTS USED FOR REPAIRS. HOWEVER, AN INSURANCE COMPANY IS NOT REQUIRED TO PAY MORE THAN A REASONABLE AMOUNT FOR SUCH REPAIRS AND PARTS.”

28 TAC 5.501, effective 10/12/2006

What it means in Texas

An insurer that pays a total loss on a car at a vehicle storage facility owes the facility its charges, even storage from before payment. Those facility rules, with daily caps like $20 for vehicles up to 25 feet, don't cover a car stored with the owner's consent. No rule in our Texas collection requires notice before the insurer stops paying storage. Holding a car for a reason other than repair earns reasonable storage, but only 5 days until you mail the required notice.

Occupations Code chapter 2303 states it does not apply to a vehicle stored with the owner's consent. The daily fees can be adjusted by rule. No rule in our Texas collection requires an insurer to give notice before it stops paying storage.

The law's own words

Insurer

“An insurance company that pays a claim of total loss on a vehicle in a vehicle storage facility is liable to the operator of the facility for any money owed to the operator in relation to delivery of the vehicle to or storage of the vehicle in the facility regardless of whether an amount accrued before the insurance company paid the claim.”

Tex. Occ. Code 2303.156, effective 6/1/2003

Tow and storage lot

“(3) a daily storage fee, subject to Section 2303.1552, of: (A) $20 for each day or part of a day the vehicle is stored at the facility if the vehicle is not longer than 25 feet; or (B) $35 for each day or part of a day the vehicle is stored at the facility if the vehicle is longer than 25 feet; and”

Tex. Occ. Code 2303.155, effective 6/14/2019

Tow and storage lot

“The operator of a vehicle storage facility who receives a vehicle that is registered in this state and that is towed to the facility for storage shall send a written notice to the registered owner and the primary lienholder of the vehicle not later than the fifth day after the date but not earlier than 24 hours after the date the operator receives the vehicle.”

Tex. Occ. Code 2303.151, effective 6/15/2017

Shop

“A garagekeeper who acquires custody of a motor vehicle for a purpose other than repair is entitled to towing, preservation, and notification charges and reasonable storage fees, in addition to storage fees earned under a contract, for each day: (1) not to exceed five days, until the notice described by Section 683.031(a) is mailed; and”

Tex. Transp. Code 683.032, effective 9/1/1997

What it means in Texas

You can keep the car until you're paid; giving it back releases the lien unless the check or card you took bounced or was stopped. To sell, send the owner and every lender on the title a certified letter stating the amount and asking for payment, and within 30 days after the charges accrue file a copy, with a $25 fee, with the county tax assessor-collector. If you're still unpaid by the 31st day after filing, you can sell at public sale. Your lender letter must include your shop's address, legal name, tax ID and signed work order, or the lender's lien comes first.

The garageman's lien in 70.003(c) covers care and towing and excludes repair charges. The owner or a lienholder may pay all charges before the 31st day after the county filing to get the vehicle. No bond release appears in our collection.

The law's own words

Keep the car

“(a) A worker in this state who by labor repairs an article, including a vehicle, motorboat, vessel, or outboard motor, may retain possession of the article until: (1) the amount due under the contract for the repairs is paid; or (2) if no amount is specified by contract, the reasonable and usual compensation is paid.”

Tex. Prop. Code 70.001, effective 6/19/2015

Storage lien

“(c) A garageman with whom a motor vehicle, motorboat, vessel, or outboard motor is left for care has a lien on the motor vehicle, motorboat, vessel, or outboard motor for the amount of the charges for the care, including reasonable charges for towing the motor vehicle, motorboat, vessel, or outboard motor to the garageman's place of business and excluding charges for repairs.”

Tex. Prop. Code 70.003, effective 9/1/2009

Sell or title it

“Subject to Subsection (a-1), a holder of a possessory lien on a motor vehicle under Section 70.001, other than a person licensed as a franchised dealer under Chapter 2301, Occupations Code, shall file a copy of the notice and all information required by this section with the county tax assessor-collector's office in the county in which the repairs were made with an administrative fee of $25 payable to the county tax assessor-collector.”

Tex. Prop. Code 70.006, effective 9/1/2021

Sell or title it

“(b) Except as provided by Subsection (c), the notice must be sent by certified mail with return receipt requested and must include the amount of the charges and a request for payment.”

Tex. Prop. Code 70.006, effective 9/1/2021

Sell or title it

“(f) If the charges are not paid before the 31st day after the date that a copy of the notice required by Subsection (a) is filed with the county tax assessor-collector's office, the lienholder may sell the motor vehicle, motorboat, vessel, or outboard motor at a public sale and apply the proceeds to the charges.”

Tex. Prop. Code 70.006, effective 9/1/2021

What it means in Texas

In Texas, the insurer can't limit coverage by specifying the brand, type, age, supplier or condition of parts unless commissioner rules allow it, which must require the limit on the policy's face and the insured's written consent at purchase. Its required notice says your customer can choose the parts, but the insurer need only pay a reasonable amount. It can't stop you from telling your customer the parts' source and price. Department guidance calls underpaying for like kind and quality parts an unfair claim practice.

The parts rule applies to automobile policies delivered, issued or renewed in Texas; on a third-party liability claim the insurer also can't require a particular brand, type, age, supplier or condition of parts. TDI Bulletin B-0031-10 (August 2, 2010) is Department guidance, not a statute or rule.

The law's own words

Insurer

From a list that begins: “an insurer may not directly or indirectly limit the insurer's coverage under a policy covering damage to a motor vehicle by:”

“(1) specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle; or”

Tex. Ins. Code 1952.301, effective 4/1/2007

Insurer

From a list that begins: “Rules adopted by the commissioner to implement this subchapter must include requirements that:”

“(1) any limitation described by Section 1952.301(a) be clearly and prominently displayed on the face of the insurance policy or certificate in lieu of an insurance policy; and (2) the insured give written consent to a limitation described by Section 1952.301(a) after the insured is notified orally and in writing of the limitation at the time the insurance policy is purchased.”

Tex. Ins. Code 1952.307, effective 4/1/2007

Insurer

“An insurer may not prohibit a repair person or facility from providing a beneficiary or third-party claimant with information that states: (1) the description, manufacturer, or source of the parts used; and (2) the amounts charged to the insurer for the parts and related labor.”

Tex. Ins. Code 1952.304, effective 4/1/2007

Insurer

“BY LAW, YOU HAVE THE RIGHT TO SELECT WHERE YOUR MOTOR VEHICLE IS REPAIRED AND THE PARTS USED FOR REPAIRS. HOWEVER, AN INSURANCE COMPANY IS NOT REQUIRED TO PAY MORE THAN A REASONABLE AMOUNT FOR SUCH REPAIRS AND PARTS.”

28 TAC 5.501, effective 10/12/2006

Parts standard

“It is an unfair claim settlement practice for insurers to pay claimants an amount for the repair of the vehicle, including parts, that is not a reasonable amount for repairing or replacing the property with other of like kind and quality or is not sufficient enough to make the repairs necessary for the manufacturer to honor the vehicle warranty.”

TDI Bulletin B-0031-10, issued 8/2/2010 (agency guidance, not a statute or rule)

What it means in Texas

Texas requires personal auto policies issued or renewed on or after January 1, 2026 to include an appraisal clause, used only to settle the amount of loss when the policyholder and the insurer disagree. The law doesn't say who can invoke it; the policy's clause does. The amount set binds both sides unless there was fraud, accident, a material mistake, or an award made without authority. It doesn't help on a claim against the other driver's insurer, or on a commercial policy.

Chapter 1813 applies only to personal auto and residential property policies delivered, issued or renewed on or after January 1, 2026; commercial policies and Texas Windstorm Insurance Association policies are excluded. Its text speaks only of disputes between the policyholder and the insurer and leaves who may invoke appraisal to the policy. The commissioner must adopt rules, including the time to complete an appraisal; no such rule is in the captured law. The S.B. 458 row is uncodified session-law text; the Act took effect September 1, 2025.

The law's own words

Appraisal right

“(a) An insurance policy described by Section 1813.001(a) must contain an appraisal provision that complies with this chapter. (b) The appraisal provision required by this chapter is intended to provide a type of dispute resolution process solely to determine the amount of loss when that amount is in dispute between the policyholder and the insurer.”

Tex. Ins. Code 1813.003, effective 9/1/2025

Appraisal right

“(a) This chapter applies only to a personal automobile or residential property insurance policy delivered, issued for delivery, or renewed in this state by an insurer, including:”

Tex. Ins. Code 1813.001, effective 9/1/2025

How appraisal works

“(b) Except for fraud, accident, or material mistake relevant to the appraisal or an appraisal award made without authority, the amount of loss determined by an appraisal under this chapter is binding as to the policyholder and the insurer.”

Tex. Ins. Code 1813.004, effective 9/1/2025

How appraisal works

“(a) The commissioner shall adopt rules necessary to implement this chapter, including: (1) rules establishing the period in which an appraisal under a provision required by this chapter must be completed; and (2) rules mandating an appraisal for total loss and damage of the property that is the subject of the appraisal.”

Tex. Ins. Code 1813.002, effective 9/1/2025

Appraisal right

“SECTION 2. (a) 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, 2026.”

Tex. Sess. Law 89R S.B. 458 § 2, effective 9/1/2025

What it means in Texas

Texas has no labor rate or survey law. The insurer's required notice to your customer says it needn't pay more than a reasonable amount for repairs and parts. Discounting your labor for insurer referrals can't cut the insured's coverage, and the insurer can't stop you from telling your customer what you charged it for labor. Department guidance calls paying less than a reasonable amount an unfair claim practice. Whether a rate is reasonable is a question for the Department of Insurance or a lawyer.

Chapter 1952 covers automobile insurance policies, and the 28 TAC 5.501 notice rule does not apply to the policy's "towing and labor costs coverage". Section 541.060 does not give a cause of action to a third party claiming against an insured. TDI Bulletin B-0031-10 (August 2, 2010) is Department guidance, not a statute or rule; it also says neither the required notice nor policy language suggests the reasonable amount be based on a limited number of preferred repair facilities.

The law's own words

What the insurer pays

“A contract between an insurer and a repair person or facility, including an agreement under which the repair person or facility agrees to extend discounts for parts or labor to the insurer in exchange for referrals by the insurer, may not result in a reduction of coverage under an insured's automobile insurance policy.”

Tex. Ins. Code 1952.303, effective 4/1/2007

Related claim rule

“An insurer may not prohibit a repair person or facility from providing a beneficiary or third-party claimant with information that states: (1) the description, manufacturer, or source of the parts used; and (2) the amounts charged to the insurer for the parts and related labor.”

Tex. Ins. Code 1952.304, effective 4/1/2007

Related claim rule

From a list that begins: “It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:”

“failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: (A) a claim with respect to which the insurer's liability has become reasonably clear;”

Tex. Ins. Code 541.060, effective 4/1/2005

What the insurer pays

“BY LAW, YOU HAVE THE RIGHT TO SELECT WHERE YOUR MOTOR VEHICLE IS REPAIRED AND THE PARTS USED FOR REPAIRS. HOWEVER, AN INSURANCE COMPANY IS NOT REQUIRED TO PAY MORE THAN A REASONABLE AMOUNT FOR SUCH REPAIRS AND PARTS.”

28 TAC 5.501, effective 10/12/2006

What the insurer pays

“It is an unfair claim settlement practice for insurers to pay claimants an amount for the repair of the vehicle, including parts, that is not a reasonable amount for repairing or replacing the property with other of like kind and quality or is not sufficient enough to make the repairs necessary for the manufacturer to honor the vehicle warranty.”

TDI Bulletin B-0031-10, issued 8/2/2010 (agency guidance, not a statute or rule)

What it means in Texas

Texas has no law on paint and materials caps. A required notice tells your customer they pick the shop and parts, but the insurer need not pay more than a reasonable amount. 2011 Department guidance, which doesn't mention paint or materials, calls it unfair to pay less than a reasonable amount for a like kind and quality repair, or too little for the maker to honor the warranty. Whether a cap breaks the law is for the Department of Insurance or a lawyer.

TDI Bulletin B-0026-11 (June 20, 2011) is Department guidance, not a statute or rule, and creates no right to sue. It speaks of repairs, parts and artificially low reimbursement rates, not paint or materials by name. Section 541.060(a) protects an insured or beneficiary and, by its own subsection (b), gives no cause of action to a third party claiming against an insured.

The law's own words

Related claim rule

From a list that begins: “It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:”

“(2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: (A) a claim with respect to which the insurer's liability has become reasonably clear; or”

Tex. Ins. Code 541.060, effective 4/1/2005

Related claim rule

“BY LAW, YOU HAVE THE RIGHT TO SELECT WHERE YOUR MOTOR VEHICLE IS REPAIRED AND THE PARTS USED FOR REPAIRS. HOWEVER, AN INSURANCE COMPANY IS NOT REQUIRED TO PAY MORE THAN A REASONABLE AMOUNT FOR SUCH REPAIRS AND PARTS.”

28 TAC 5.501, effective 10/12/2006

What the insurer pays

“It is an unfair claim settlement practice for an insurer to pay a claimant an amount for the repair of the vehicle, including parts, that is not a reasonable amount for repairing or replacing the property with other of like kind and quality, or is not sufficient to make the repairs necessary for the manufacturer to honor the vehicle warranty.”

TDI Bulletin B-0026-11, issued 6/20/2011 (agency guidance, not a statute or rule)

What the insurer pays

“The Department continues to have concerns that setting reimbursement rates artificially low for specific motor vehicle repairs and parts that are used to make the repairs may lead to substandard repairs, which may also impact vehicle warranties.”

TDI Bulletin B-0026-11, issued 6/20/2011 (agency guidance, not a statute or rule)

What it means in Texas

Texas's prompt-pay law protects only the policyholder. Within 15 days of notice, the insurer must acknowledge the claim and start investigating; it must accept or reject within 15 business days of getting everything it asked for (45 more days if it says why), then pay within 5 business days. Breaking these rules, or delaying payment over 60 days, costs 18% yearly interest plus attorney fees. For third-party claims, a rule presumes acknowledging any communication within 15 business days is reasonably prompt.

Chapter 542, Subchapter B covers only first-party claims made by an insured, policyholder or beneficiary and paid directly to them. Surplus lines insurers get 30 business days to acknowledge and 20 business days to pay, and the claim-handling deadlines stretch 15 days after a declared weather catastrophe or major natural disaster. Section 542.060(c) sets a different interest rate in actions governed by Chapter 542A, which covers real-property weather claims.

The law's own words

Respond

“Not later than the 15th day or, if the insurer is an eligible surplus lines insurer, the 30th business day after the date an insurer receives notice of a claim, the insurer shall: (1) acknowledge receipt of the claim; (2) commence any investigation of the claim; and”

Tex. Ins. Code 542.055, effective 4/1/2005

Accept or deny

“an insurer shall notify a claimant in writing of the acceptance or rejection of a claim not later than the 15th business day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss.”

Tex. Ins. Code 542.056, effective 4/1/2005

Pay

“if an insurer notifies a claimant under Section 542.056 that the insurer will pay a claim or part of a claim, the insurer shall pay the claim not later than the fifth business day after the date notice is made.”

Tex. Ins. Code 542.057, effective 4/1/2005

If late

“the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable and necessary attorney's fees.”

Tex. Ins. Code 542.060, effective 9/1/2017

Respond

From a list that begins: “Unfair claim settlement practices means committing or performing any of the following:”

“(2) failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies, provided that "pertinent communications" will exclude written communications that are direct responses to specific inquiries made by the insurer after initial report of a claim. An acknowledgment within 15 business days is presumed to be reasonably prompt;”

28 TAC 21.203, effective 11/7/2021