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Texas Surplus Lines Arbitration: What SB 455 Changes
For years a surplus lines policy could send a Houston homeowner's dispute to another state. Since January 1, 2026, it stays home.
The answer
If your surplus lines policy covers a Texas home and carries an arbitration clause, that arbitration now happens in Texas, under Texas law, and the contract is read under Texas law. SB 455 made that the rule for policies issued or renewed on or after January 1, 2026. Two exits remain, a written notice with a premium credit if you agree to move it, and a mutual agreement on homes insured for more than two million dollars. Read the clause before you bind. The handshake stays in Texas.
What SB 455 changed
A surplus lines carrier is not licensed in Texas. TDI approves which ones can do business here, and they do not have to let TDI review their policies or rates. The contract is the carrier's own, and for years some of those contracts chose another state for arbitration and another state's law. SB 455 passed in 2025 without a single no vote in either chamber and added two subsections to Section 981.101 of the Insurance Code. The first one is the rule. A dispute over a Texas home gets heard in Texas.
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Before January 1, 2026
- Where the arbitration happens
- Wherever the contract said, often another state
- Whose law governs
- Whatever state the contract named
- Who chose
- The carrier, in the form
- What it comes down to
- Out of state
-
Since January 1, 2026
- Where the arbitration happens
- Texas
- Whose law governs
- Texas, and the contract is read under Texas law
- Who chose
- Texas law, and you if a carrier asks to move it
- What it comes down to
- In Texas
A company behind a company in another state
Here is what the old clause could hide. A surplus lines carrier, owned by a holding company, headquartered in another state, with a contract that sent every dispute there under that state's law. Each step was legal. Together they put the carrier a flight away from the homeowner it insured, and the cost of the trip did the carrier's arguing for it. Each layer was legal. Together they put the carrier out of reach.
What the law leaves alone
SB 455 does not put an arbitration clause into any policy. It governs the clause when one is already there. Policies from a carrier licensed in Texas live under other rules, and a surplus lines policy issued or renewed before January 1, 2026 keeps the clause it had until it renews. The law governs the clause that is already there.
The two exits
The rule has two doors out, and a form that uses one will look routine. Know what each looks like before you sign.
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The notice and the credit
- Who can use it
- Any surplus lines contract on a Texas risk
- What has to happen
- Written notice from the carrier, your agreement, and a premium credit for the costs the move puts on you
- What to ask
- What does the credit cover, and what would the move cost me
- What it comes down to
- Your agreement, paid for
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The two million dollar agreement
- Who can use it
- Contracts with more than $2 million in insured value
- What has to happen
- Mutual consent to another venue and another state's law, in a form, and the statute's sentence ends there
- What to ask
- Why would Texas be the wrong place to hear a dispute about a Texas home
- What it comes down to
- Your consent, in writing
Nobody moves the table without your yes.
Read the clause before you bind
The surplus lines notice sits on the face of the policy. The arbitration clause sits deeper, usually under Conditions, and it is short. Read it in this order.
- 01
Conditions
Find it
Look under Conditions for Arbitration, Dispute Resolution, or Choice of Law. Some forms put it in an endorsement at the back.
- 02
Venue
Read the where
The clause should say the arbitration is conducted in Texas. A city in another state, or no place at all, is the first question for the carrier.
- 03
Texas law
Read the whose
Two lines. The arbitration is governed by Texas law, and the contract is interpreted under Texas law. Each belongs there on a policy issued or renewed since January 1, 2026.
- 04
Your yes
Read the exit
Any sentence about a different venue, a notice, a credit, or mutual consent is the carrier reserving a door. You decide whether it opens.
Then ask the agent one question out loud, and listen for the word Texas.
If we disagree about a claim, where is that heard, and under whose law?
The clause is short. Read every line.
What happens when you send it
You want one thing from this page. To know where a dispute over your home would be heard, and to be sure before you bind. Here is the whole path.
- 01
Free
Send it
The quote or the policy, with the Conditions pages and any endorsement at the back. The surplus lines notice on the face tells us which market you are in.
- 02
On our desk
We read the clause
Venue, governing law, and interpretation, line by line, against what SB 455 requires on a policy issued or renewed since January 1, 2026. Any notice, credit, or consent language gets named for what it is.
- 03
Your call
You get one of three answers
It reads Texas, bind it. It carries an exit, bind it knowing what the door costs. It reads another state on a policy that should read Texas, and the carrier gets the question before you sign anything. About 40 percent of the time we tell homeowners to stay with their current carrier, and sometimes even with their current agent, because that is the right answer for the family.
You send the quote. We find the table.
The handshake is the point
There is something about Texans. Being seen and understood matters here, and so does a handshake across a table, with the house down the street. For years a surplus lines policy could be a company behind a company in another state, with a clause that sent the argument there, and enough families and enough brokerages ran into it that the Legislature ended it without a single no vote. I would rather you never need the clause. Until then it should read like that handshake, in Texas, under Texas rules. The worst day is hard enough without a boarding pass.
Charles McDade, LUTCF
Questions readers ask
Does SB 455 force my surplus lines policy into arbitration?
No. The law governs an arbitration clause that is already in the contract and says nothing about whether a carrier includes one. If your policy has no arbitration clause, nothing changed for you.
My surplus lines policy renewed in 2025. Does the new rule apply to me?
Not yet. The rule applies to contracts delivered, issued for delivery, or renewed on or after January 1, 2026. A policy issued or renewed before that keeps the clause it had until its next renewal, and the renewal is where to read it again.
What is the premium credit in SB 455?
If a carrier wants the arbitration somewhere other than Texas, it has to give you written notice of the request, you have to agree, and it has to give you a premium credit for the costs the change puts on you. Ask what the credit covers before you say yes. Travel, a lawyer licensed in another state, and time away from work are all costs of a move. The venue can move with your agreement. Texas law still governs.
Does SB 455 apply to a regular, licensed home insurance policy?
No. It amends Chapter 981 of the Insurance Code, which covers surplus lines. A carrier licensed in Texas files its policy forms and rates with TDI and belongs to the guaranty association, and TDI takes complaints about it.
Is arbitration the same as appraisal?
No. Appraisal is a clause in most home policies that settles a disagreement about the amount of a loss, with each side choosing an appraiser and an umpire deciding what the two cannot agree on. Arbitration replaces the courtroom with a private decision maker for the dispute itself, coverage included. SB 455 governs where and under whose law that arbitration happens in a surplus lines policy.
My home is insured for more than two million dollars. What is different for me?
On a surplus lines contract with more than two million dollars in insured value, the carrier and you may agree by mutual consent to a different venue and another state's law. The statute says the agreement must be in a form, and the sentence ends there. Read anything the carrier asks you to sign with that in mind, and ask why Texas would be the wrong place to hear a dispute about a Texas home.
Sources worth opening before you decide
- Senate Bill 455, enrolled text, Texas Legislature Online, 89th Legislature, effective September 1, 2025
- Bill analysis, Senate Bill 455, Texas Legislature Online, enrolled version
- Surplus lines insurance guide, Texas Department of Insurance, updated April 25, 2025
- What is surplus lines insurance?, Office of Public Insurance Counsel, updated August 13, 2026
The purpose is to help the reader ask better questions before claim time.
Know where your claim would be heard
The law moved the table to Texas. Make sure your contract agrees.
Send the surplus lines quote or the policy you hold. A licensed Texas agent reads the arbitration clause against what the law requires since January 1, 2026, names any exit the carrier reserved, and tells you plainly where a dispute would be heard, client or not. We translate the contract before you sign for another year.
The audit is free. The decision is yours. No broker fees for personal lines clients.