Consent to Assignment Clauses

Last month in Part One of this article, available at http://bit.ly/1m8nbYs, we discussed the fact that most insurance policies contain anti-assignment provisions, purporting to prohibit the assignment of interests in the policy without the insurer's consent. Insurers rarely offer their consent to assignments. Thus, whether a policy's anti-assignment clause will void a transfer of insurance proceeds or coverage rights, by contract or operation of law, usually requires an analysis of whether the predecessor corporation is an insured under the policy; whether the predecessor corporation still exists; whether the successor corporation succeeded to the predecessor's liabilities and insurance assets by operation of law; whether the coverage rights or policies were transferred by agreement; and, whether the claim for which the successor seeks coverage constitutes a “chose in action” at the time of the transfer. Most jurisdictions that have considered these matters agree that after a loss, an insurance policy's consent-to-assignment clause is unenforceable. In fact, California, which had until recently been in the minority on this issue, now has corrected course.