HB 2399
In CommitteeHouse
Prop. insurance assignments
Prohibiting the post-loss assignment of benefits in property insurance.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill bans post-loss assignment of benefits in property insurance — meaning contractors or others can no longer get policyholders to sign agreements giving them control over insurance claims and payments after a loss. The goal is to keep policyholders in charge of their own claims. The ban does not apply to public adjusters, attorneys, or certain property-related financial arrangements.
- Prohibits contractors or other third parties from soliciting, coercing, or entering into agreements where a policyholder assigns their post-loss insurance benefits (e.g., right to claim payments or sue the insurer) to the third party.
- Declares such post-loss assignment agreements void and unenforceable.
- Allows exceptions for licensed public adjusters, attorneys working on contingency, assignments to mortgage lenders or property buyers, and liability coverage under insurance policies.
- Clarifies that allowing a contractor to be paid directly for covered services (e.g., repairs) is still permitted — the ban only applies to assigning *claim rights*, not just payment for services.
- Empowers the Insurance Commissioner to investigate violations and impose a civil penalty of $50,000 per violation, with fines paid into the state general fund.
Who is affected
- Property insurance policyholders — Property insurance policyholders who may be approached by contractors to sign agreements transferring their insurance claim rights after a loss; this bill protects them from being pressured into such arrangements.
- Property restoration and mitigation contractors — Restoration, mitigation, or repair contractors who previously relied on post-loss assignment agreements to collect insurance payments directly and control claims; they must now work through the policyholder or use permitted alternatives.
- Public adjusters and insurance claim attorneys — Public adjusters and attorneys who assist policyholders with claims, as the bill explicitly allows them to continue operating under existing rules and agreements.
- Federally insured financial institutions and mortgagees — Mortgage lenders and financial institutions that hold liens on properties, as the bill permits assignments to them under specific conditions.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The ban prevents coercive or deceptive solicitation tactics by contractors that strip policyholders — especially vulnerable populations like seniors, low-income households, and disaster victims — of control over their own insurance claims, including the right to approve settlements, communicate with insurers, or sue the insurer.
Rights & LibertiesPeopleRef: Sec. 2(1)By voiding assignment agreements, the bill protects policyholders from being locked into unfavorable contracts where third parties may inflate repair costs, delay insurer payments, or settle claims for less than the policyholder would have received — thereby preserving claim proceeds for the actual homeowner.
FinancialPeopleRef: Sec. 2(1)The explicit preservation of licensed public adjusters and contingency-based attorneys ensures policyholders retain access to professional claim advocacy — but only if they can afford such services — reducing the risk of unrepresented individuals being exploited by unlicensed third parties.
Public SafetyPeopleRef: Sec. 2(2)(a)-(b)The $50,000 civil penalty for violations creates a strong deterrent against predatory solicitation, which may reduce fraudulent or abusive claims practices — ultimately stabilizing insurance premiums by curbing inflated repair bills and litigation triggered by assignment schemes.
Business & EmploymentPeopleRef: Sec. 2(4)The bill clarifies that direct payment for services (e.g., water extraction, boarding-up) remains permissible — helping ensure that emergency mitigation services can still be provided quickly, though under a more transparent and policyholder-controlled process.
HousingPeopleRef: Sec. 2(3)
Potential Concerns (5)
Banning post-loss assignment agreements will significantly disrupt the business model of many restoration and mitigation contractors who rely on these agreements to secure steady cash flow and reduce collection risk; this may force some small contractors out of business or into less efficient operational models, reducing competition and potentially increasing repair costs over time.
Business & EmploymentPeopleRef: Sec. 2(1)While direct payment for services remains permitted, the bill creates administrative complexity for contractors who must now bill policyholders first and wait for reimbursement rather than billing insurers directly — increasing overhead, delaying cash flow, and disproportionately harming small, undercapitalized firms with limited working capital.
Business & EmploymentPeopleRef: Sec. 2(3)The $50,000-per-violation civil penalty may deter legitimate contractors from working with vulnerable policyholders (e.g., elderly, trauma-affected) due to fear of misinterpreting permissible conduct — potentially reducing access to timely post-loss services in disaster-affected communities.
Public SafetyLean peopleRef: Sec. 2(4)By removing a common tool for rapid post-loss mitigation, the bill may slow repair timelines after fires, floods, or windstorms — increasing the risk of secondary damage, mold, and prolonged displacement for low-income and elderly homeowners who lack resources to manage claims alone.
HousingLean peopleRef: Sec. 2(1)While the bill generates revenue via fines, local governments may face increased costs if displaced residents file for emergency shelter or social services due to delayed repairs — though this is speculative and not directly funded by the bill.
Local GovernmentRef: Sec. 2(4)
Who Is Most Affected
Low- and middle-income homeowners, especially seniors and disaster victims, benefit significantly: they retain control over claims, avoid predatory contracts, and keep more of their insurance proceeds — but may face delays in repairs if they lack resources to manage the claim themselves.
Small and mid-sized restoration/contracting firms face disruption: those relying on assignment agreements may lose revenue and face cash-flow pressures, while ethical firms that already bill through policyholders may see little change — overall negative for the sector, especially smaller players.
Public adjusters and claim attorneys are explicitly protected and can continue operating — but they must still comply with existing licensing and ethical rules; this group is largely neutral-to-positive, though they may see increased demand as policyholders seek professional help to navigate the new process.
Mortgage lenders benefit from continued ability to receive assignments — protecting their lien — but this is a narrow exception; overall neutral-to-positive for them, though not the primary focus of the bill.
Insurance companies may benefit from reduced litigation and inflated claims, but the bill does not alter their core obligations — net neutral-to-slightly-positive, though not a primary beneficiary.