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Senate hearing spotlights homeowner risks from post-loss assignment-of-benefits; Insurance Commissioner backs SB 6,178
Summary
Sponsor Sen. Victoria Hunt and Insurance Commissioner Patty Kuderer told the committee SB 6,178 would bar contractors from soliciting post-loss assignment of benefits, protecting homeowners after disasters from losing negotiation rights; insurers and consumer-advocacy groups testified in favor.
The committee opened public testimony on Senate Bill 6,178, an agency-request consumer-protection bill from the Office of the Insurance Commissioner (OIC) that would prohibit certain post-loss assignment-of-benefits (AOB) agreements in property-insurance claims.
Staff explained an AOB lets a policyholder assign post-loss insurance benefits to a third party (for example, a repair contractor or remediation company), allowing that third party to negotiate directly with the insurer and to sue on the policyholder’s behalf. The bill would make agreements that solicit, coerce, require or contractually transfer those post-loss benefits void and unenforceable, subject to listed exceptions, and would authorize OIC enforcement including fines (the briefing referenced a $50,000-per-violation penalty).
Senator Victoria Hunt (5th Legislative District), the prime sponsor, framed the bill as a protection for homeowners following flood or fire who may be vulnerable and hurried into contracts. She emphasized the bill does not prohibit a property owner from authorizing direct payment of insurance proceeds to a repair vendor but prevents assignment that strips the homeowner of the ability to negotiate or settle claims. Hunt described an example where a contractor failed to provide requested claim evidence to an insurer and communication lapsed, resulting in a denial and leaving the homeowner without recourse.
Insurance Commissioner Patty Kuderer testified in support, describing problems when contractors ask policyholders to sign away claim rights during disaster recovery. She cited examples from other states (notably Florida) where AOB misuse became widespread after disasters and said prohibiting problematic AOBs would protect consumers and help limit inflated claim costs that drive premiums higher. OIC and other supporters — including the Washington State Association for Justice, PEMCO Insurance, the National Insurance Crime Bureau, and the Coalition Against Insurance Fraud — testified the bill is a targeted response to AOB abuse and asked the committee to support it.
No committee action was taken; the hearing record contains testimony from consumer advocates and insurers and OIC representatives who described how assignments can remove policyholders’ dispute-resolution rights and impede timely investigations.
