Assignment of benefits bill unanimously passes Washington state Senate

OLYMPIA, Wash. — A bill prohibiting post-loss assignment of benefits agreements passed the Washington state Senate on Thursday, Feb. 5, by a unanimous vote (48-0-0-1). 

Senate Bill 6178, requested by Washington state Insurance Commissioner Patty Kuderer, increases protections for insurance consumers. A post-loss assignment of benefits (AOB) is an agreement that allows a third party, like a contractor, to receive insurance payments directly from the consumer’s insurance company.  

These agreements are presented as a convenience for policyholders, but the practice has been abused in other states after natural disasters. When a consumer signs the agreement, their right to negotiate with the insurance company shifts to the repair professional and they lose control over their claim. This can lead to delays in the repair work as these disagreements are resolved, as well as inflated claim costs, unnecessary litigation, and higher premiums. 

Kuderer called the bill a common-sense piece of consumer protection legislation. 

“It’s become an issue in states with frequent natural disasters,” she said. “Disreputable contractors have shown up in storm-ravaged towns and pressure consumers to sign AOBs, and then take control of their claims with a focus on maximizing costs with no priority on making repairs and making the original policyholder whole.” 

The bill, prime sponsored by Sen. Victoria Hunt (D – Issaquah) now moves to the House of Representatives for consideration.