AN ACT Relating to prohibiting the post-loss assignment of benefits in property insurance;
Summary
SB 6178 would prohibit most post-loss assignment of benefits in property insurance. The bill defines a post-loss assignment agreement as a contract that transfers an insured’s property insurance claim rights or benefits to a third party, typically a contractor or similar service provider after a loss has occurred. Under the bill, such agreements would be void and unenforceable if they are used to assign or transfer post-loss insurance benefits from the insured to another person.
The bill also states legislative findings that the policyholder should remain in control of the property claim and that consumer protections in the insurance code are intended to benefit the policyholder. It distinguishes prohibited post-loss assignments from other arrangements, including direct payment to contractors, retention of licensed public adjusters or attorneys under certain written agreements, mortgage-related transfers, and liability coverage under personal or commercial policies. The bill authorizes the insurance commissioner to enforce violations and impose a civil penalty, with collected fines directed to the state general fund.
Impact
SB 6178 would add a new section to Washington’s insurance statutes, specifically chapter 48. It would create a new prohibition on post-loss assignment agreements in property insurance and give the insurance commissioner enforcement authority, including the ability to act under existing insurance-code enforcement provisions and assess penalties per violation. The measure would affect policyholders, contractors, public adjusters, attorneys, insurers, mortgagees, and other parties involved in property claims and repair or restoration services.
Sentiment
The available voting history shows strong support for the bill. It passed the Senate Business, Trade & Economic Development Committee unanimously and later passed the Senate on third reading and final passage by a 48-0 vote. No committee transcript objections are provided, and the recorded votes suggest broad agreement with the bill’s consumer-protection and claims-control framework.
Contention
The central policy issue is whether post-loss assignment of benefits should be allowed in property insurance claims. Supporters, as reflected in the bill findings, appear to view these assignments as undermining policyholder control and complicating claims handling. Potential opponents would likely include restoration and mitigation contractors, and possibly some consumer advocates or attorneys, who may argue that assignments help insureds obtain repairs or services without upfront payment and can facilitate claim resolution. The bill narrows the prohibition with several exceptions, which suggests attention to preserving common financing, legal, and payment arrangements while still restricting third-party claim control.