Larry Bache and I have many cases in Nebraska where we represent a contractor with assignments of insurance claims from homeowners. These assignments were made after a hail loss. The policyholder assigned his rights to the insurance claim to the roofing contractor working on his property. Most insurance policies contain what is called an anti-assignment clause, which forbids the policyholder from assigning rights and duties in the policy to anyone else without the insurance carrier’s consent. In Nebraska the insurance companies have steadily argued that our client’s claims are not valid because they were assigned without the insurance companies’ consent.
The Nebraska Supreme Court recently held that post-loss assignments of claims are valid in Nebraska regardless of any anti-assignment clause.1
In Millard Gutter the policy stated:
- All rights and duties under this policy may not be assigned without our written consent.
- No change of interest in this policy is effective unless we consent in writing.
A homeowner was insured with Farm Bureau. A hail storm damaged the home. Millard Gutter was hired to repair the house. The policyholder assigned his right to Millard Gutter in an “Assignment of Claim,” which provided the policyholder assigned to Millard Gutter “any and all moneys due or to become due.” Farm Bureau argued that the assignment was invalid because Farm Bureau did not consent to the assignment as per the anti-assignment clause. Farm Bureau also argued that as assignee Millard Gutter was not the real party in interest and had no privity of contract with Farm Bureau.
The Nebraska Supreme Court conducted and exhaustive survey how other state and federal courts dealt with post-loss assignments with policies containing an anti-assignment clause. A majority of state courts hold that post-loss assignments are valid and do not violate the anti-assignment clause.
Antiassignment clauses in insurance policies are strictly enforced against attempted transfers of the policy itself before a loss has occurred, because this type of assignment involves a transfer of the contractual relationship and, in most cases, would materially increase the risk to the insurer. Policy provisions that require the company’s consent for an assignment of rights are generally enforceable only before a loss occurs, however. As a general principle, a clause restricting assignment does not in any way limit the policyholder’s power to make an assignment of the rights under the policy—consisting of the right to receive the proceeds of the policy—after a loss has occurred. The reasoning here is that once a loss occurs, an assignment of the policyholder’s rights regarding that loss in no way materially increases the risk to the insurer. After a loss occurs, the indemnity policy is no longer an executory contract of insurance. It is now a vested claim against the insurer and can be freely assigned or sold like any other chose in action or piece of property. *6 (Emphasis in the original)
Based on this analysis the Nebraska Supreme Court held that, absent a statute to the contrary, a post-loss assignment of a claim under an insurance policy for the policyholder’s property damage casualty loss is valid, despite a non-assignment clause. Because these types of assignments are valid, assignee contractors like Millard Gutter have standing to bring breach of contract claims and courts do not lack subject matter jurisdiction over the actions.
This is a well written opinion by the Nebraska Supreme Court and settles once and for all that in Nebraska, post-loss assignment of claims to contractors are valid and enforceable.
1 Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 295 Neb. 419 (Neb., 2016).