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Texas Auto Injury Claims: How Insurers Value Your Damages, How to Dispute a Lowball Offer, and Special Rules When a Government Vehicle Is Involved

By Accident Atlas Editorial Team · Reviewed by Phil Ayres · Updated July 12, 2026 · 9 min read

First, decide which claim path you're on — it changes how your damages get calculated

Before you can evaluate whether an insurer's offer is fair, you need to know which claim process you're actually in, because that choice determines who investigates the loss, who writes the repair estimate, and who you'll be negotiating with if you disagree with the number.

In a third-party claim, you let the other driver's insurance company investigate and pay for your damages. Alternatively, if you have collision coverage, you can let your own insurer deal with the other driver: your company pays the cost of your damages and then tries to collect from the other driver's insurer.

If you go the first-party (collision) route, you'll probably have to pay a deductible up front, although it may be recovered and refunded later if your insurer successfully collects from the at-fault driver's carrier.

This choice matters because it fixes who conducts the investigation, who adjusts the estimate, and who you'll need to negotiate with — or escalate against — if the dollar figure doesn't match your actual damages.

How the actual cash value of your vehicle damage is calculated

Insurance companies are only obligated to pay for repairs or replacement of your car up to its actual cash value (ACV) — the cost to replace your car, minus depreciation. This is often the single biggest surprise for claimants who expect a payout equal to what it would cost to buy the same car new.

Depreciation is defined as a decrease in value because of wear and tear or age. That deduction is applied to your vehicle's pre-loss value before the insurer calculates what it owes you.

On parts, the insurer is only required to pay for parts of like kind and quality to those that were damaged — it does not have to pay for original parts from the manufacturer. Some companies will give you a list of preferred repair shops, but they can't require you to use a shop on that list; you retain the right to choose your own repair facility.

What happens during the claim investigation that produces the dollar figure

Once a claim is opened, the insurer will conduct an investigation and may request more information from you — and you are required to cooperate with your insurance company during this process.

Your vehicle will be inspected as part of building the damage estimate, and you'll be working with adjusters throughout. There are several timelines your insurance company must meet when investigating and handling your claim — details on those deadlines are covered in the Auto Bill of Rights.

Before you accept any payout, make sure you get copies of any estimates and keep all records about your claim, including repair estimates, emails, receipts, and medical bills. Having this documentation in hand is what lets you spot and challenge an inaccurate ACV or depreciation figure.

If you disagree with the amount offered: your dispute options, in order

If you and your insurance company don't agree on the amount of your claim, or what your policy covers, Texas consumer guidance lays out a sequence of steps to work through, starting with the least formal.

Step 1: Tell the insurance company why you disagree with the adjuster's estimate or the offered amount — contact your adjuster directly and explain your reasoning. Many disputes are resolved simply by talking with the company or the adjuster.

Step 2: If that doesn't resolve things, contact your insurance company and ask to discuss your claim with a manager.

Step 3: Ask for an appraisal. The appraisal process is specifically designed for disputes about the amount of your claim. You and the insurance company each hire an appraiser, and the two appraisers then choose a third appraiser to serve as umpire. If the two appraisers' estimates differ, the umpire makes the final, binding decision. You'll pay for your own appraiser and half of the umpire's expenses. Note that appraisal is only available for disputes with your own insurance company, not with another person's insurer.

Step 4: You can also pay a qualified appraiser to independently examine the damage to your property, separate from the formal appraisal process.

Step 5: Contact an attorney to advise you of your legal rights. The State Bar of Texas can help you find one.

Step 6: File a complaint with the Texas Department of Insurance (TDI). Keep in mind TDI's ability to help is limited — it can't decide who was at fault in an accident or determine damage amounts. If the dispute still isn't resolved, you may ultimately need to resolve the issue in court; claims under $20,000 can be brought in Justice Court without an attorney, though filing fees and court costs apply upfront (refundable if you win).

Special calculation rules when a government entity or employee caused the damage

When the at-fault vehicle belongs to a governmental unit — a city, county, or other state entity — the ordinary third-party claim process changes because of sovereign immunity. Under the Texas Tort Claims Act, sovereign immunity to suit is waived and abolished only to the extent of liability created by that chapter.

It's also important to separate the government entity's liability from the individual employee's liability. To the extent an employee has individual immunity from a tort claim for damages, that immunity is not affected by the Tort Claims Act — meaning the employee's personal immunity and the governmental unit's liability under the Act are evaluated on separate tracks.

There are also specific carve-outs that remove certain claims from Tort Claims Act coverage entirely. The Act does not apply to a claim for property damage caused by the removal of graffiti under Local Government Code Section 250.006, and it does not apply to a claim for property damage caused by a computer date failure.

Additionally, the common law doctrine of vicarious liability based on participation in a joint enterprise does not impose liability under the Tort Claims Act on certain water districts created under specified constitutional provisions, or on a municipality with respect to the use of a municipal airport for space flight activities (unless the municipality would otherwise be liable). This narrows who can actually be held liable in those specific contexts.

How policy status affects whether your damages claim can even be paid

A damages claim doesn't exist in a vacuum — the status of your own policy can complicate collection. An insurance company must give you 10 days' notice before it cancels your policy.

During the first 60 days of a policy, an insurer may cancel it for any reason, unless doing so would violate a law. If a cancellation dispute arises around the same time as a damages claim, it's worth checking exactly where you are in that 60-day window.

An insurance company may also cancel your policy at any time if you stop paying your premiums, if you file a fraudulent claim, or if your driver's license or car registration is suspended or revoked — and this last ground also applies to other drivers who live with you or use your car. Any of these events can complicate your ability to collect on a pending claim, so it's worth confirming your policy is in good standing before you count on a payout.

Judgments and settlements: what counts toward final recovery under Texas law

If your dispute escalates to litigation, it helps to understand how Texas law defines a "judgment" for motor vehicle claims. Under the Motor Vehicle Safety Responsibility Act, judgment refers only to a final judgment that is no longer appealable, or one that has been finally affirmed on appeal, rendered on a cause of action for damages for bodily injury, death, or damage to or destruction of property arising out of the ownership, maintenance, or use of a motor vehicle.

Importantly, the statute treats a settlement agreement for such damages the same as a judgment for these purposes. This matters if you're negotiating a settlement instead of litigating to a verdict — the settlement can carry the same weight as a judgment when it comes to satisfying financial responsibility requirements under the Act.

Next-step checklist for pursuing your damages claim

Identify whether you're filing a first-party or third-party claim, and confirm whether a deductible applies to your situation.

Request and review the actual cash value and depreciation breakdown on any repair estimate before you accept a payout.

Document your cooperation with the insurer's investigation and track the claims-handling deadlines that apply to your policy.

If a government vehicle or employee is involved, confirm whether a Tort Claims Act exception, immunity issue, or liability cap applies before you proceed.

Escalate disputes methodically: adjuster, then manager, then appraisal, then independent appraiser, then attorney, then a TDI complaint if needed.

Confirm whether any settlement you reach will be treated as a "judgment" for purposes of downstream financial responsibility compliance.