New Jersey Supreme Court Rules That Anti-Assignment Clause Does Not Bar Post-Loss Assignments
02.27.17
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(Article from Insurance Law Alert, February 2017)
For more information, please visit the Insurance Law Alert Resource Center. Joining a growing majority of jurisdictions, the New Jersey Supreme Court ruled that an anti-assignment clause does not preclude a post-loss transfer of insurance benefits. Givaudan Fragrances Corp. v. Aetna Cas. & Sur. Co., 2017 WL 429476 (N.J. Feb. 1, 2017).
Givaudan Fragrances (“GF”) sought coverage under various liability policies for environmental contamination claims. Insurers denied coverage on the basis that GF was not a named insured, and that any purported assignment of policy benefits to GF was invalid because consent was not given. In ensuing litigation, a New Jersey trial court ruled in the insurers’ favor. An appellate court reversed, reasoning that the transfer was valid because the covered loss had already occurred and the insurers’ risk was therefore unchanged. See September 2015 Alert. The New Jersey Supreme Court affirmed.
The New Jersey Supreme Court stated: “We hold that, once an insured loss has occurred, an anti-assignment clause in an occurrence policy may not provide a basis for an insurer’s declination of coverage based on the insured’s assignment of the right to invoke policy coverage for that loss.” The court further held that it is not necessary for the claims to be reduced to a judgment, reasoning that “the relevant event giving rise to coverage is the loss event, not the entry of a judgment fixing the amount of damage for that loss.”