In the June 2012 edition of this column,1 we discussed the enforceability of non-assignment clauses in insurance policies and, in particular, the Supreme Court of California’s decision in Henkel Corp. v. Hartford Accident & Indemnity Co.2 In Henkel, the court had departed from the majority rule and denied a successor entity the right to its predecessor’s insurance despite the fact that the underlying loss predated the assignment of insurance rights. But recently, in Fluor Corp. v. Superior Court,3 the Supreme Court of California overruled Henkel. Corporate policyholders in California welcomed the court’s decision in Fluor Corp., which also served to align California’s view with the view of the New York courts.

As a refresher, most liability insurance policies contain a standard non-assignment clause or anti-assignment clause that prohibits assignment without the insurer’s prior written consent. This clause is intended to protect the insurer from a material increase in risk that might result from the transfer of the insurance policy to a new entity. In the context of an asset purchase deal, however, many clients will seek to transfer existing rights under insurance policies to the purchasing company, notwithstanding the non-assignment clause, and usually without the consent of the insurer.4 Whether such a transfer is valid often depends on the applicable law governing the assignment of rights.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]