When your insurance company says it wants to repair your property instead of paying your claim, do you have to agree?
The answer depends on your insurance policy, the timing of the insurer’s decision, and Texas law. While many property insurance policies contain an “Our Option” or “Right to Repair” clause, surprisingly little Texas law explains how these provisions work in practice.
At Green, Klein, Wood & Jones, we regularly analyze complex property insurance disputes involving insurance law, policy interpretation and insurer obligations to handle claims in good faith. One increasingly important issue is an insurer’s contractual right to repair damaged property instead of issuing a cash payment.
Because this area of Texas law remains largely undeveloped, policyholders, public adjusters, and contractors should understand both what Texas courts have decided—and what questions remain unanswered.
For many, an insurer invoking their right to repair comes as an unpleasant surprise. Imagine your home has sustained major damage from a storm, and when you make a claim, your insurance company agrees to pay for the loss, but insists on using one of their “preferred contractors” instead of the general contractor you would have hired. The insurance company would choose the company that enters your home, selects the material, hires the labor, provides the warranty, pulls the building permits, and spends however many days working on your property, and that contractor does not know you at all. This scenario stands as an affront to the notion of private property where the owner of the property would generally be in control of who can access their property and who can perform work there.
In any other context of insurance, it would be repugnant to the basic idea of consumer rights for an insurance company to make the choice as to how insurance proceeds are spent in response to the occurrence of an insured event. For example, imagine a corporate director making a claim on her Directors & Officers liability insurance policy, only for the insurance company to force her to hire a defense attorney of the insurance company’s choice rather than being able to decide for herself who would represent her in court. Imagine a medical insurer admitting they are liable to pay for a surgical operation but requiring an insured patient to use a surgeon they’ve never met instead of the specialist the patient would have chosen. These examples illustrate that, in the context of Property Casualty insurance, the insurance carrier’s right to repair stands in stark contrast to insurance norms.
Fortunately, insureds have some legal recourse if an insurance company invokes their right to repair and the resulting work is unsatisfactory.
Quick Answer: What Is the Right to Repair?
The Right to Repair, sometimes called the Option to Repair or Our Option Clause, is a provision found in many Texas homeowners and commercial property insurance policies that allows an insurer to repair, rebuild, or replace damaged property instead of paying the insured money for the loss.
Typical policy language states:
“We may repair, rebuild, or replace the property with other property of like kind and quality.”
Although this language appears in many insurance policies, Texas statutes provide almost no guidance regarding how the option must be exercised or what happens after an insurer elects to repair.
That lack of guidance creates significant legal questions during many property insurance claims.
Why the Right to Repair Matters
Insurance companies increasingly invoke repair provisions to:
- Control claim costs
- Select preferred contractors
- Manage repair scope
- Limit cash payments
- Reduce disputes over replacement pricing
For policyholders, however, an insurer’s election to repair can affect far more than who performs the work.
It can influence:
- Who controls the repairs
- Whether appraisal is still available
- Responsibility for defective workmanship
- Litigation strategy
- The ultimate value of the claim
Understanding these issues before agreeing to insurer-controlled repairs is critical.
Texas Law Is Surprisingly Limited
One of the biggest misconceptions surrounding the Right to Repair is that Texas has extensive case law governing these disputes.
It does not.
In fact, Texas has only one published appellate opinion directly addressing an insurer’s contractual right to repair.
That case — North River Insurance Co. v. Rippy — was decided nearly a century ago.
The Landmark Texas Case: North River Insurance Co. v. Rippy
In Rippy, a windstorm damaged the insured’s residence.
The policyholder demanded appraisal as required by the insurance policy.
Instead of participating, the insurance company:
- refused appraisal,
- denied liability,
- forced the insured to file suit, and
- waited until the day of trial to invoke its contractual option to repair.
The Fort Worth Court of Civil Appeals held that the insurer had waived its right to repair by refusing appraisal, denying liability, and delaying its election until litigation.
Why Rippy Still Matters Today
Although decided in 1929, Rippy remains the leading Texas authority on insurer repair elections.
Its central principle is straightforward:
An insurer cannot treat the claim one way throughout adjustment and then attempt to invoke the repair option after its conduct has become inconsistent with that contractual right.
That principle continues to influence how attorneys evaluate repair elections today. In general, the insurance company can only invoke their option to repair the property if they accept liability for the underlying claim. An insurance company cannot deny liability for the claim only to invoke their option to repair as a response to the insured filing a lawsuit.
What Texas Courts Have Not Decided
Although Rippy established that insurers may waive the right to repair, it answered very few of the questions practitioners encounter today.
Texas appellate courts have not clearly decided:
- How quickly an insurer must elect to repair
- Whether an insurer may change its position during the claim
- Whether an appraisal award affects the repair option
- Whether the insurer assumes responsibility for contractor negligence
- What damages exist if repairs are performed improperly
- Whether the repair option creates additional contractual obligations
Those unanswered questions are becoming increasingly important as insurers rely more heavily on repair elections.
How Florida Law Provides Insight
Unlike Texas, Florida has developed decades of statutory and appellate authority addressing insurer repair elections.
Although Florida decisions are not binding in Texas, they often provide persuasive guidance because they address legal issues Texas courts have yet to resolve.
Florida courts have recognized that when an insurer properly elects to repair, the relationship may become something entirely different than an ordinary insurance claim.
Does Electing to Repair Create a New Contract?
Several jurisdictions—including Florida—recognize that once an insurer elects to repair, the insurer may assume an entirely new contractual obligation.
Rather than simply paying policy benefits, the insurer becomes responsible for actually restoring the property.
Beginning with Wynkoop v. Niagara Fire Insurance Co. and later adopted in Drew v. Mobile USA Insurance Co., Florida courts have explained that a valid election to repair may create a substitute repair contract.
Under this approach:
- the insurer becomes responsible for completing repairs,
- repairs must be completed within a reasonable time,
- defective workmanship may constitute a new breach of contract, and
- damages may extend beyond the original insurance benefits.
Texas courts have not yet adopted this analysis, but it illustrates how other jurisdictions evaluate insurer-controlled repairs.
Can an Insurer Invoke the Right to Repair After Appraisal?
This is one of the most important unanswered questions in Texas property insurance law.
Rippy establishes that denying liability and refusing appraisal can waive the repair option.
However, no Texas appellate court has answered the opposite question:
Can an insurer wait until after appraisal determines the amount of loss before electing to repair?
At present, there is no definitive Texas authority addressing that sequence.
As appraisal becomes more common following recent Texas Supreme Court decisions, this issue will likely become an increasingly important area of litigation.
Who Is Responsible for Poor Repairs?
Another unresolved issue involves contractor responsibility.
Insurance policies generally state that the insurer will repair or replace damaged property.
In practice, insurers usually hire independent contractors.
That raises important legal questions:
- Is the contractor acting as the insurer’s agent?
- Who bears responsibility for construction defects?
- Can the insurer avoid liability by blaming its contractor?
These questions remain largely unresolved under Texas appellate law, making careful documentation and legal analysis especially important whenever an insurer controls repairs. When representing an insured in a case where the insurance company has invoked their right to repair, we would generally take the position that the insurance company’s chosen contractor is legally the agent of the insurance company, resulting in the insurance company being liable for any construction defects and any additional damages that may be sustained by the insured property resulting from the contractor’s acts or omissions. It would be inappropriate for the insurance company to invoke the right to repair, force the insured to rely upon a specified contractor chosen by the insurance company, and then disclaim responsibility for damages that occur by the acts or omissions of the insurance company’s chosen contractor. If the insurance company or their chosen contractor breaks it, they should buy it, and the insured should not be forced to bring a separate legal action against the insurance company’s chosen contractor when it was the insurance company’s decision that brought them to the job site in the first place. If it is the insurer’s right, then it is the insurer’s responsibility.
Practical Guidance for Policyholders
If your insurance company elects to repair your property:
Read the policy carefully.
Not every insurance policy contains identical repair language.
Evaluate the insurer’s timing.
Has the insurer consistently maintained its repair position, or did it first deny coverage?
Preserve all communications.
Emails, letters, contractor communications, inspection reports, and repair schedules may later become important evidence.
Document the repair process.
Photographs, videos, and written observations can help establish whether repairs were completed properly and in compliance with all applicable laws, building codes, manufacturer’s guidelines, and any other applicable requirement.
Seek legal advice early.
Because Texas law remains unsettled, early legal analysis may significantly affect your rights and available remedies.
Frequently Asked Questions
Can my insurance company choose to repair my home instead of paying me?
Yes. Many Texas property insurance policies contain an option-to-repair provision allowing the insurer to repair damaged property instead of issuing a cash payment. Whether that election is enforceable depends on the policy language and the insurer’s conduct.
Can an insurance company lose its right to repair?
Yes. Texas courts have recognized that an insurer may waive its repair option through conduct that is inconsistent with exercising that right, including denying liability and refusing appraisal.
Can I choose my own contractor?
The answer depends on your insurance policy, the insurer’s election, and the specific facts of your claim. Because this area of Texas law remains unsettled, policy language should be carefully reviewed before making that decision.
What if the insurer’s contractor performs defective work?
Texas law has not fully addressed this issue. Depending on the circumstances, the insurer may remain responsible for repairs performed on its behalf.
Does appraisal eliminate the insurer’s right to repair?
No Texas appellate court has definitively answered that question, making it one of the most significant unresolved issues in Texas property insurance litigation.
Why Experience Matters
The Right to Repair is rapidly becoming one of the most significant—and least understood—issues in Texas property insurance law. While insurers increasingly rely on these policy provisions to control claims, the legal framework governing repair elections remains remarkably sparse.
At Green, Klein, Wood & Jones, we represent policyholders in complex first-party insurance disputes involving property damage, appraisal, policy interpretation, and insurer misconduct. Our attorneys closely monitor developments in Texas insurance law to help clients protect their contractual rights when insurers invoke the option to repair.
If your insurance company has elected to repair your property, or if you have questions about your rights under your insurance policy, experienced legal counsel can help evaluate whether the insurer’s election complies with Texas law and the terms of your policy.
