Homeowners Can Assign Post-Loss Claims Despite Anti-Assignment Provisions

An insurance company cannot limit an insured’s assignment of a post-loss claim, at least in so far as the assignee is simply standing in the shoes of the insured.

In Farmer’s Insurance Exchange v. EcoDry Restoration of Arizona, LLC, the Arizona Court of Appeals last month rejected the insurance company’s argument that, despite Arizona’s case and statutory law allowing such assignments, the insured should only be allowed to assign the claim when the amount of the loss is undisputed.

The ruling may lead to a rewriting of insurance anti-assignment provisions to specifically

The case involve four homeowners who hired EcoDry to repair water damage to their homes and the appellate court accepted the interlocutory appeal because, according to the parties’ briefs, more than 150 similar cases had been filed in the prior year.  In the present matter, all of the homeowner policies contained a provision prohibiting any assignment without Farmer’s consent.

Arizona law recognizes an insurance company’s right to prohibit assignments under the policy, but has generally recognized that the insured may still assign a claim.

The appellate court noted that the assignment of a claim is not an assignment of the policy.  It also noted that the state’s unfair claim settlement practices “evidences the legislature’s intent to allow insureds to assign claims arising under an insurance policy.”  Whether this would prevent insurance companies from rewriting their policies to prohibit the assignment of claims specifically probably remains to be seen.


By William Horne

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Posted in: Business Law

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