A recent federal appellate court case seems to have closed any hope on assignment of benefits in Ohio.1 The case involved a post-loss assignment of insurance claims benefits to a body shop to do repairs. The holding upheld anti-assignment language in the policy:
Under Ohio law, an assignment of contract rights is generally invalid when ‘there is clear contractual language prohibiting assignment.’ Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 861 N.E.2d 121, 128 (Ohio 2006). Here, the insurance contracts expressly barred any assignment absent State Farm’s consent and State Farm did not consent to any of the assignments. Blue Ash counters that the Pilkington court chose not to enforce the anti-assignment clause there, and contends that we should do the same here. But Pilkington stands apart from this case: there, the assignee was a successor-in-interest to a predecessor company that had suffered a fixed loss before the succession and assignment. Here, by contrast, the insureds purported to assign their rights to a third party—Blue Ash—and the amounts of their losses are disputed. Suffice it to say that Pilkington’s facts are distinguishable. The terms of the insurance contracts govern here.
Contractors in Ohio should carefully read the insurance policy to see if there is an anti-assignment clause. If one exists and there is a dispute about the amount owing, the policyholder will have to bring a lawsuit or otherwise force the issue of the amount owed for the repairs.
Thought For The Day
Never spend your money before you have earned it.
1 Blue Ash Auto Body, Inc. v. State Farm Mut. Auto. Ins. Co., No. 21-3365, 2021 WL 5755632 (6th Cir. Dec. 3, 2021).