Senate Bill Report - SB 6178, Post-Loss Assignment of Benefits in Property Insurance (January 21, 2026)

Summary

Senate Bill Report on SB 6178, as of January 21, 2026, for the Senate Committee on Business, Trade & Economic Development, with committee activity listed for 1/21/26. The bill is an act relating to prohibiting the post-loss assignment of benefits in property insurance, with sponsors Senators Hunt, Cortes, Frame and Nobles, by request of Insurance Commissioner. The summary of the bill says a person may not solicit, coerce, require, or contract with an insured to enter into an assignment agreement for a post-loss property insurance benefit, and that such an agreement is void and unenforceable. It adds that the Office of the Insurance Commissioner may issue a cease-and-desist order and impose a fine of $50,000 per violation. The report lists Appropriation: None and a fiscal note requested on January 14, 2026.

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                             SENATE BILL REPORT
                                   SB 6178

                                      As of January 21, 2026

Title: An act relating to prohibiting the post-loss assignment of benefits in property insurance.

Brief Description: Prohibiting the post-loss assignment of benefits in property insurance.

Sponsors: Senators Hunt, Cortes, Frame and Nobles; by request of Insurance Commissioner.

Brief History:
     Committee Activity: Business, Trade & Economic Development: 1/21/26.


                                      Brief Summary of Bill
           • Prohibits a person from soliciting, coercing, requiring, or contracting
             with an insured to enter into an agreement to assign or transfer a post-
             loss property insurance benefit from the insured to the person.
           • Specifies the scope of, and exceptions from, the restriction.
           • Authorizes the Office of the Insurance Commissioner to enforce
             violations of the restriction.


SENATE COMMITTEE ON BUSINESS, TRADE & ECONOMIC DEVELOPMENT

     Staff: John Kim (786-7453)

     Background: According to the National Association of Insurance Commissioners, an
     assignment of benefits (AOB) is an agreement signed by a policyholder that allows a third
     party, such as a repair company, to act on behalf of the insured and seek payment from the
     insurer. An AOB allows the third party to deal directly with the insurer in negotiating
     repairs and issuing payment directly to the third party without the policyholder's
     involvement. An AOB also assigns the policyholder's rights and benefits in resolving a
     claim to the third party, including the right to sue after a denial and mediate the claim.




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

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     Current state law does not specifically address the assignment of benefits under property
     insurance policies.

     Summary of Bill: The bill prohibits a person from soliciting, coercing, requiring, or
     contracting with any insured to enter into an assignment agreement, in whole or in part,
     whereby any post-loss insurance benefit under any property insurance coverage is assigned
     or transferred from the insured to the person. Such assignment agreement is void and
     unenforceable.

     This restriction does not apply to any of the following:
        • an insured retaining the services of a licensed public adjuster under a written
           agreement to represent solely the policyholder's financial interest on the loss;
        • an insured retaining the services of an attorney under a written agreement that
           compensates the attorney based on a percentage of a monetary recovery as permitted
           by the rules of professional conduct;
        • an assignment, transfer, pledge, or conveyance granted to a federally insured financial
           institution, mortgagee, or subsequent purchaser of the property; or
        • liability coverage under a personal or commercial line insurance policy.

     The restriction also does not prohibit an insured from authorizing or directing payment to,
     or paying, a person for services, materials, or any other thing which may be, or is, covered
     under an insurance policy.

     If the Office of the Insurance Commissioner (OIC) has cause to believe that any person has
     violated the restriction, the OIC may issue a cease-and-desist order, bring an action for
     injunctive relief, and impose a fine of $50,000 per violation. Any fine collected by the OIC
     for such violation must be paid to the state treasurer for the account of the general fund.

     The following terms are defined:
        • assignment agreement means any instrument, by which post-loss benefits under any
           property insurance coverage including, but not limited to, any right of action against
           the insurer or any proceeds acquired from the insurer, are assigned or transferred to a
           person providing services to the insured including, but not limited to, inspecting,
           protecting, repairing, restoring, constructing, or replacing the insured's property or
           mitigating the insured's property against further damage;
        • property insurance is insurance against loss of or damage to real or personal property
           of every kind and any interest therein, from any or all hazard or cause, and against
           loss consequential upon such loss or damage; and
        • public adjuster means an adjuster employed by and representing solely the financial
           interests of the insured named in the policy.

     Appropriation: None.

     Fiscal Note: Requested on January 14, 2026.


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     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.

     Staff Summary of Public Testimony: PRO: My district was affected by the bomb cyclone
     last year, increased wildfire risk, and flooding from the recent atmospheric river. The bill
     addresses damage from fire or major water events. Under current law, a contractor that
     comes in to provide repair services can have a part of the contract that would assign the
     insurance benefits over to the contractor. This can happen at a moment when the
     homeowner is in a very vulnerable position and may not be in a time when they are reading
     the repair company's legal contract line-by-line. This can block the homeowner from
     participating in the implementation of the insurance claim. This bill protects the consumer
     from potential financial disaster. There was a consumer who had a water loss and signed an
     assignment agreement. The insurance company asked for photos but the contractor did not
     provide them, leading to a denial of the claim. The OIC got involved but ultimately the
     contractor stopped communicating with the OIC.

     The OIC finds aggressive vendors can pressure consumers to sign documents before
     contacting their insurance company, misrepresent facts, or perform unauthorized work.
     Contractors have expertise in repair procedures and how to efficiently do the work, but they
     are not licensed to discuss how insurance coverage works or how the loss settlement
     procedures in a policy guide the claim. That is the role of licensed public adjusters and
     attorneys. An assignment of benefits (AOB) transfers key rights to the contractor and are
     often presented as a convenience. Multiple Gulf states have seen rampant AOB misuse and
     have prohibited AOBs. We are starting to see similar patterns in Washington, particularly
     with water damage claims, and are trying to get ahead of the problem. We understand that
     the Washington State Association for Justice has some clarifying changes on the intent
     section relating to covenant judgments and we'll work with them on it.

     The Washington State Association for Justice supports the bill. I've seen repair contractors
     ask customers to assign their property insurance rights and it cause big problems. An AOB
     gives the contractor extra leverage over the insurance company, but the homeowner loses
     their rights for other coverages such as for temporary housing or for personal property.

     PEMCO Insurance supports this bill to ensure the policyholder retains their rights
     throughout the entire claim process and beyond. By assigning their benefits, the
     policyholder loses their right to pursue dispute resolution under the policy.

     The National Insurance Crime Bureau supports the bill. Post-loss AOBs create misaligned
     incentives and removes the policyholder from the claims process.

     Persons Testifying: PRO: Senator Victoria Hunt, Prime Sponsor; Joel Hanson,
     Washington State Association for Justice; Patty Kuderer, Office of the Insurance
     Commissioner; David Forte, Office of the Insurance Commissioner; Janet McDaniel,


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     PEMCO Insurance; Marian Smith, National Insurance Crime Bureau.

     Persons Signed In To Testify But Not Testifying: No one.




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