A colleague of mine recently dealt with an interesting issue regarding the assignment of an insurance claim. Specifically, she looked into how Texas law applies to the assignment of an insurance claim when the insurance policy contains a non-assignment clause. Most states follow the rule that if the policy prohibits assignment, the insured cannot assign the policy but can assign the right to the claim after it occurs. Unsurprisingly, Texas does not follow the majority rule.
The general rule in Texas is that an insured cannot assign an insurance claim if the policy contains a non-assignment clause. See Hoffman v. St. Paul Guardian and Texas Farmers Ins. Co. v. Gerdes. However, Texas law does allow an insured to sell the right to a cause of action if a suit has been filed, even if the underlying contract cannot be assigned. See Pagosa Oil v. Marrs and Smith Partnership.
Texas Property Code Section 12.014(a) states:
A judgment or part of judgment of a court of record or an interest in a cause of action on which suit has been filed may be sold, regardless of whether the judgment or cause of action is assignable in law or equity, if the transfer is in writing.
Therefore, although insurance law does not allow you to assign your claim if your policy contains a non-assignment clause, Texas property law allows you to reach the same result by selling the cause of action in writing. Although I don’t know the attorney who discovered this workaround, if s/he’s reading this, we all thank you.