Washington State Enacts Law Ensuring Fair Auto Insurance Payouts with Independent Appraisals

Starting January 1, 2026, Washington State will implement a new auto insurance regulation under Engrossed Senate Bill 5721 to ensure fair payouts and repair estimates for totaled vehicles. This law grants insured drivers the right to independent appraisals if they contest their insurer's valuation, introducing a binding appraisal process involving neutral third-party appraisers.

The legislation aims to address widespread consumer complaints, as the state's Office of the Insurance Commissioner reported that 88% of claims disputes relate to damage assessments and claim handling.

While the law seeks to provide fairness and transparency in resolving disagreements, it also requires both insurers and policyholders to cover their own appraisal costs after amendments removed provisions holding insurers responsible if estimates differ by $500 or more. Industry groups have voiced concerns that the new process could increase claim costs, delay settlements, and prompt premium hikes to offset resulting expenses.

The bill reflects a regulatory balance between protecting consumers' rights in claims disputes and maintaining insurance market efficiency. This reform is expected to influence insurer practices by encouraging more accurate initial damage assessments and promoting negotiated settlements before appraisals. Washington's new law represents a regulatory shift prioritizing equitable claims processes while acknowledging potential challenges in cost and timing for insurers and policyholders alike.