Consistent with numerous other jurisdictions, the New Jersey Supreme Court has held that insurance anti-assignment clauses do not preclude policyholders from assigning claims after a loss. In Givaudan Fragrances Corp. v. Aetna Cas. & Sur. Co., the Court examined claims for the defense and indemnification of an environmental liability action. The plaintiff brought a declaratory judgment complaint against several insurers, contending that it was entitled to coverage as an affiliate of the named insured. While the declaratory judgment action was pending, the corporate successor-in-interest to the named insured executed an assignment of rights under the policy to the plaintiff. Citing the assignment of rights (as well as its status as an affiliate of the named insured), the plaintiff filed a motion for summary judgment. The insurers responded by filing a cross-motion for summary judgment, arguing that the assignment was invalid pursuant to the policies’ anti-assignment clauses, and that the plaintiff did not have rights under the policies as an affiliate. The trial court denied the policyholder’s motion for summary judgment and granted the insurers’ cross-motion for summary judgment. These decisions were reversed and remanded by the Appellate Division. An appeal to the Supreme Court followed.
Applying prior decisions of the Appellate Division as well as decisions of other jurisdictions, the state Supreme Court held that anti-assignment clauses do not prevent policyholders from the assignment of claims following a loss. The Court explained that the primary purpose of anti-assignment clauses is to protect insurers from increased liability. This purpose does not apply to the post-loss assignment of claims, as the insurer’s exposure to a covered loss is not affected by a post-loss assignment. The Court therefore concluded that the post-loss assignment (including assignment of the duty to defend) was valid, and affirmed the Appellate Division’s decision.