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Committee hears testimony urging protections for homeowners in post‑loss insurance claims
Summary
Supporters told the committee SB 6,178 would stop contractors from taking over homeowners' post‑loss insurance rights and leaving homeowners without recourse; the Office of the Insurance Commissioner and consumer advocates urged passage while members questioned penalties and whether the law might sweep in legitimate contractors.
Lawmakers heard extensive public testimony on Senate Bill 6,178 on Feb. 18, a bill the sponsor said is intended to protect homeowners — particularly after wildfires or other disasters — from contracts that transfer post‑loss insurance rights to contractors.
Sen. Victoria Hunt (5th Legislative District), sponsor of SB 6,178, said the bill is aimed at situations where "contractors are beginning to incorporate clauses into repair contracts that fully grant them and not the homeowner the benefits from their future insurance payout." She told the committee the legislation does not prevent a homeowner from authorizing direct payment of insurance proceeds to a contractor but does prohibit a contractor from "standing in the shoes" of the owner and controlling the insurance claim.
Rory Payne Donovan of the Office of the Insurance Commissioner told the committee OIC has "seen an uptick in complaints" from policyholders pressured to sign documents before contacting insurers and that assignments often transfer key policy rights to contractors, limiting homeowners’ ability to communicate with their insurers. OIC recommended moving the bill forward, described the $50,000 per‑violation fine as intended to deter misconduct, and said OIC would conduct education for the industry if the bill passes.
Consumer advocates and legal practitioners also supported the bill. Marian Smith of the National Insurance Crime Bureau offered to partner with OIC on fraud awareness and education. Attorney Catherine Knudson, representing the Washington State Association for Justice, said contractors sometimes obtain assignments that include alternative living expense claims and other rights unrelated to repair work, leaving homeowners without counsel or recourse.
Committee members pressed sponsors and OIC on whether the statute should distinguish between good‑faith contractors and bad actors, whether a cooling‑off period would address harms, and whether existing consumer‑protection statutes (e.g., the Consumer Protection Act) already cover misrepresentations. Senator Hunt and OIC representatives said they were open to considering graduated penalties or distinctions between first‑time and repeat violations and to further consultation on enforcement design.
The public hearing closed after several stakeholder witnesses testified; no committee vote was taken during the meeting.
