Insurance mortgagee clauses

AN ACT Relating to mortgagee clauses; adding a new section to 1
chapter 48.30 RCW; adding a new chapter to Title 61 RCW; and 2
providing an effective date. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. A new section is added to chapter 48.30 5
RCW to read as follows: 6
This section applies to property insurance claims on residential 7
properties in which the insurance contract includes a mortgagee 8
clause with a loss payee and for which the property is not a total 9
loss and considered repairable. 10
(1) An insurer who recommends a contractor to the insured shall 11
require the preferred contractor to agree to begin repairs on the 12
property without first requiring an upfront payment that exceeds:13
(a) An insured's deductible; and 14
(b) The insurance proceeds that the mortgagee or assignee has 15
released to the insured. 16
(2)(a) Unless the conditions in (b) of this subsection are met, 17
the insurer shall pay at least 50 percent of property insurance 18
proceeds directly to the insured, whereas the remaining proceeds may 19
be paid to the insured and the mortgagee or assignee.20
H-2783.2
HOUSE BILL 2553
State of Washington 69th Legislature 2026 Regular Session
By Representatives Duerr and Reed
Read first time 01/19/26. Referred to Committee on Consumer
Protection & Business.
p. 1 HB 2553
(b) If a mortgagee or assignee listed as a loss payee on a 1
property insurance contract holds a loan on the residential property 2
that is less than or equal to 25 percent of the property's assessed 3
value and the loan is in good standing, then the insurer shall only 4
make the insurance proceeds payable to the insured.5
(3) The requirement in subsection (2) of this section applies 6
prospectively only to residential mortgage loans with a mortgagee 7
clause executed on or after January 1, 2027. 8
NEW SECTION. Sec. 2. This section applies to residential 9
mortgage loans held by a mortgagee or assignee that includes a 10
mortgagee clause.11
(1) Insurance proceeds received by a mortgagee or assignee for 12
contents insurance coverage or for additional living expenses in 13
which the mortgagee or assignee does not have a security interest in 14
the contents must be promptly distributed to the insured.15
(2) A mortgagee or assignee holding insurance proceeds from a 16
property insurance claim in which property repairs have been 17
partially or fully completed and for which an inspection of such 18
repairs has been completed and approved is required to issue the 19
applicable partial or full payment to the insured within two business 20
days. 21
NEW SECTION. Sec. 3. Section 2 of this act constitutes a new 22
chapter in Title 61 RCW.23
NEW SECTION. Sec. 4. Section 1 of this act takes effect January 24
1, 2027.25
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p. 2 HB 2553