The requests from our readers keep coming and in and this week we are taking a look at Assignment of Benefits (“AOBs”) in North Carolina.
AOBs are permitted in North Carolina, however there are several restrictions. First, concerning the AOB itself, the Courts have held that, “’[a]n action ‘arising out of contract’ generally can be assigned[ ]’ and the assignee may bring a breach of contract action.”1 Next, where the policy includes an anti-assignment clause, the clause will be considered valid and the rights under the policy will not be assignable.2
Additionally, even if you have a valid assignment and the policy doesn’t prohibit it, you are limited to filing suit on breach of contract only: “A claim for tortious, bad faith refusal to settle is more akin to an unassignable claim for unfair and deceptive trade practices than to an assignable claim of breach of contract. The allegations of bad faith make this claim personal to  the insured. It may not be assigned.”3
If you have any specific questions on AOBs or would like to see your state come up sooner, please comment below, or send me an email at firstname.lastname@example.org.
As always, I’ll leave you with a (mildly) related tune, here’s North Carolina’s own Ben Folds Five with one of their lesser known singles, and one of my personal favorites, Army:
1 Terrell v. Lawyers Mut. Liablity Ins. Co. of North Carolina, 131 N.C.App. 655, 659 (N.C. Ct. App. 1998).
2 Id. at 660.
3 Horton v. New South Ins. Co., 122 N.C.App. 265, 269 (N.C. Ct. App. 1996).