This bill adds new statutory provisions to Washington law. It creates a new section in chapter 48.30 RCW and a new chapter in Title 61 RCW. For repairable residential property claims with a mortgagee clause and a loss payee, an insurer that recommends a contractor must require that preferred contractor to begin repairs without first requiring an upfront payment that exceeds the insured’s deductible and the insurance proceeds that the mortgagee or assignee has released to the insured. Unless an exception applies, the insurer must pay at least 50 percent of property insurance proceeds directly to the insured, with the remainder payable to the insured and the mortgagee or assignee; the bill provides an exception that if the mortgagee or assignee holds a loan that is less than or equal to 25 percent of the property’s assessed value and the loan is in good standing, the insurer shall make the insurance proceeds payable only to the insured. The 50 percent direct-payment requirement applies prospectively only to mortgagee clauses executed on or after January 1, 2027, and Section 1 takes effect January 1, 2027. The new Title 61 chapter requires mortgagees or assignees to promptly distribute insurance proceeds for contents coverage or additional living expenses when the mortgagee or assignee does not have a security interest in those contents, and requires a mortgagee or assignee holding insurance proceeds after repairs are partially or fully completed and after an inspection of such repairs has been completed and approved to issue the applicable partial or full payment to the insured within two business days. The bill creates new procedural requirements governing payment timing and distribution but does not specify enforcement mechanisms, penalties, or remedies in the extracted text. Key terms such as “insured,” “loss payee,” “assessed value,” and “good standing,” as well as the exact RCW section and chapter numbers to be added, are not defined or specified in the provided material, and the effective date for any sections beyond Section 1 is not stated.

Homeowners with repairable damage on properties that have a mortgagee clause are likely to get faster and more direct access to insurance money: insurers will be required to pay at least half of property insurance proceeds straight to the insured for new mortgagee clauses signed on or after January 1, 2027 (and in cases where the mortgage loan is small—25% or less of assessed value—and in good standing, the insurer will pay the insured only). If an insurer recommends a contractor, that contractor must begin repairs without demanding an upfront payment larger than the insured’s deductible plus whatever the mortgagee has already released to the insured, so homeowners should face fewer delays caused by contractor-payment demands or mortgagee-held funds when repairs begin. Mortgagees and assignees will lose some control and must move money faster: any insurer proceeds for contents or additional living expenses that a mortgagee does not have a security interest in must be promptly passed on to the homeowner, and when repairs are partially or fully completed and inspected/approved the mortgagee must pay the insured the applicable partial or final amount within two business days. Insurers, mortgagees, and preferred contractors will likely need new processes to meet these timing rules, creating administrative costs and operational changes; however, the bill text does not define key terms (like “promptly,” “good standing,” or “assessed value”), does not specify enforcement or penalties, and does not clarify effective dates for all sections, leaving some practical details uncertain.