After suffering a loss, it is quite common for homeowners to assign their rights under a policy to a contractor that repairs the damages. However, a conflict arises when a homeowner assigns their rights under a policy even though the policy itself may contain a non-assignment provision. Recently, the Nebraska Supreme Court was tasked with resolving such a dispute.
In Millard Gutter v. Farm Bureau Prop. & Cas. Corp., a storm damaged an insured’s roof. The insured retained a roofing contractor to repair the roof. In exchange for repairing the roof, the insured assigned his rights under the policy to the roofing contractor. The insured’s assignment of the policy was never approved by the insurer, even though the homeowner’s policy explicitly stated that “[a]ll rights and duties under this policy may not be assigned without our written consent.”
In contesting the roofing contractor’s claim for coverage, the insurer argued that the insured’s assignment of the policy was invalid under the anti-assignment provision of the policy. The Court noted that anti-assignment clauses will likely be applicable in pre-loss assignments because the insurable risk may materially change from an assignment. But, in holding that the insured could assign his rights under the policy after the loss, the Court reasoned an assignment of rights does not alter an insurer’s risk because the loss has already occurred prior to the assignment.
There has been a recent trend in courts reaching similar conclusions. For example, The Property Line covered a Florida court also held that assignments of policies after a loss are valid. It will be interesting to see how other courts choose to grapple with this issue.