NJ Applies Majority Rule Allowing Free Assignability of Insurance

For years, lawyers have struc­tured corporate transactions around the assumption that valuable insurance assets were freely assignable without the con­sent of insurance companies. For decades, that assumption proved largely true in most jurisdictions.

In 2003, in Henkel Corp. v. Hart-ford Accident & Indemnity Co., 29 Cal. 4th 934 (Cal. 2003), California departed from the well-established rule that insurance companies could not restrict the transfer of insurance assets after a loss. The fear was that other jurisdic­tions would follow Henkel and prevent policyholders from freely assigning their insurance assets. In 2015, how­ever, in Fluor Corp. v. Superior Court, 61 Cal. 4th 1175 (Cal. 2015), the Cali­fornia Supreme Court reversed itself, joining the majority of jurisdictions which held that the right to insurance proceeds for post-loss claims are freely assignable.

With heavy reliance on this 2015 California opinion, in Givaudan Fra­grances Corp. v. Aetna Cas. & Sur. Co., 227 N.J. 322 (2017), New Jer­sey joined the majority of jurisdic­tions in allowing post-loss assignment notwithstanding any anti-assignment clause contained in the insurance pol­icy. More recently, in Haskell Props. v. Am. Ins. Co., 2017 N.J. LEXIS 524 (N.J. May 16, 2017), the New Jersey Supreme Court returned to the rule of free assignability and summar­ily remanded a case that had allowed assignment.