This bill introduces new regulations regarding mortgagee clauses in property insurance claims for residential properties. It establishes that insurers recommending contractors must ensure that upfront payments do not exceed the insured's deductible or the insurance proceeds released by the mortgagee. Additionally, it mandates that insurers pay at least 50 percent of the insurance proceeds directly to the insured unless specific conditions regarding the mortgagee's loan status are met. These provisions will apply only to residential mortgage loans with a mortgagee clause executed on or after January 1, 2027.

Furthermore, the bill stipulates that any insurance proceeds received by a mortgagee or assignee for contents insurance or additional living expenses, where they lack a security interest, must be promptly distributed to the insured. It also requires that mortgagees or assignees holding insurance proceeds from property claims must issue payments to the insured within two business days after repairs have been inspected and approved. The new regulations will be codified as a new chapter in Title 61 RCW and will take effect on January 1, 2027.