SB 6178
In CommitteeSenate
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 agreements in property insurance, where contractors or third parties take control of a policyholder’s insurance claim after damage (e.g., fire or flood). It makes such agreements void and unenforceable, while allowing policyholders to still pay contractors directly for covered services. The goal is to keep control of claims with the policyholder, not third parties.
- Bans post-loss assignment agreements in property insurance—where a contractor or third party takes control of a policyholder’s insurance claim after damage occurs.
- Makes such assignment agreements void and unenforceable if they involve soliciting, coercing, or contracting with a policyholder to transfer claim rights.
- Allows exceptions for licensed public adjusters, attorneys, mortgage lenders, and property buyers—but only under specific conditions (e.g., written agreements, no profit from claim settlement).
- Clarifies that allowing a contractor to be paid directly by the insurer (e.g., for repairs) is still permitted—this law only blocks transfer of *claim control rights*.
- Gives the Insurance Commissioner authority to investigate violations and impose a $50,000 fine per violation, with proceeds going to the state general fund.
Who is affected
- Property insurance policyholders — Property owners who file insurance claims after damage (e.g., from fire, water, or storm) may no longer be pressured into signing agreements that transfer control of their claim to contractors.
- Property restoration and repair contractors — Contractors (e.g., water damage restoration, fire cleanup, or repair firms) can no longer require or solicit policyholders to sign post-loss assignment agreements that give the contractor control over the insurance claim.
- Property insurance companies — Insurance companies will no longer be forced to deal directly with third-party contractors who claim rights through post-loss assignments, and must instead communicate primarily with the policyholder.
- Public adjusters and insurance claim attorneys — Public adjusters and attorneys who work *for the policyholder* (not on behalf of contractors) can continue to assist claimants under existing rules, as these are explicitly exempted.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Restores policyholder control over their own insurance claims, aligning with the principle that claim rights should remain with the insured—not transferred to contractors who may prioritize profit over the policyholder’s best interest.
Rights & LibertiesPeopleRef: Sec. 2(1)Allows contractors to still be paid directly by insurers for covered services, preserving a streamlined payment model while preventing abuse of claim control rights—supporting fair competition and reducing predatory solicitation.
Business & EmploymentPeopleRef: Sec. 2(3)Empowers the Insurance Commissioner to impose $50,000 fines per violation, creating a strong deterrent against coercive or deceptive solicitation tactics that have harmed consumers in other states.
Public SafetyPeopleRef: Sec. 2(4)By exempting licensed public adjusters and attorneys acting solely for the policyholder, the bill preserves access to professional representation without enabling third-party exploitation—protecting vulnerable claimants during complex recovery processes.
HealthcarePeopleRef: Sec. 2(2)(a)-(b)Reduces risk of inflated repair bills, unnecessary demolition, or lien placement on homes due to contractor-driven claim manipulation—protecting homeowners’ equity and long-term housing stability.
HousingPeopleRef: Sec. 2(1)
Potential Concerns (5)
Banning post-loss assignment agreements restricts policyholders’ contractual freedom to delegate claim control to third parties—even if those agreements are voluntarily signed—limiting their ability to outsource complex insurance navigation during high-stress events like disaster recovery.
Rights & LibertiesPeopleRef: Sec. 2(1)Restoration and mitigation contractors may lose a common business model that enables cash flow and rapid service by allowing them to bill insurers directly after acquiring claim rights; this could reduce competition and increase prices for consumers in some markets.
Business & EmploymentPeopleRef: Sec. 2(1)The $50,000 fine per violation and enforcement responsibility fall to the state Insurance Commissioner, but local governments may bear indirect costs if increased insurance disputes lead to more civil litigation or court congestion.
Local GovernmentLean peopleRef: Sec. 2(4)By limiting third-party claim control, the bill may reduce instances of contractor fraud, inflated repair estimates, and unnecessary or substandard work—practices that have been documented in other states with post-loss assignment abuse.
Public SafetyLean peopleRef: Sec. 2(1)While the bill aims to protect homeowners, it may disincentivize some contractors from offering rapid post-disaster services unless paid upfront, potentially slowing recovery for low-income or vulnerable households lacking liquidity.
HousingPeopleRef: Sec. 2(1)
Who Is Most Affected
Homeowners and renters filing property claims benefit from retained control over their claims and reduced exposure to predatory contractor tactics; however, those without liquidity may face delays if contractors require upfront payment.
Contractors relying on post-loss assignment agreements for cash flow and claim leverage may need to restructure business models; small firms may adapt more easily than large ones, but overall industry revenue may decline in high-risk zones.
Insurers benefit from reduced fraud, faster claim resolution, and less exposure to litigation with third-party assignees; however, they may face increased direct communication and verification burdens with policyholders.
Public adjusters and claim attorneys who work exclusively for policyholders retain their ability to assist—protected by explicit exemptions—while those affiliated with or funded by contractors may lose revenue streams.