Insurance Non-Assignment Clauses

Arlington insurance attorneys need to be aware of non-assignment clauses in insurance contracts. The 2005, Dallas Court of Appeals case, Hoffman v. St. Paul Guardian Insurance Company opinion is a good case to read.
This is an appeal from a take-nothing summary judgment in a dispute arising out of the denial of an insurance claim. Hoffman through its successor in interest and assignee of insurance proceeds, Dallas Medical Holdings, Ltd., sued St. Paul after St. Paul denied an insurance claim for alleged plumbing leak damages to a medical clinic building that occurred when Hoffman owned the building. This Court affirmed the ruling.
In November 1999, Hoffman filed a claim under its commercial property insurance policy with St. Paul for damages to Hoffman’s clinic building allegedly caused by plumbing leaks. In January 2000, while the insurance claim was pending, Hoffman sold the clinic building and other items to Dallas Medical Holdings, Ltd. The contract for sale provided that, ” . . . if a claim has been made by Seller against any insurance carried on the Property, . . . Seller will assign any rights Seller has under such policy to Purchaser at Closing.” The contract further provided, “Seller agrees to assign to Purchaser at Closing all rights of Seller in and to the insurance policy or policies carried by Seller to provide insurance protection of the Property.”
The policy in question provides the following with respect to assignments: Neither you or anyone else covered under this policy can assign or turn over your interest in it without our written consent attached to the policy.
St. Paul moved for summary judgment urging that because Hoffman never obtained its written consent to assign Hoffman’s interest in the policy to Dallas Medical, the purported assignment to Dallas Medical, although perhaps effective between Hoffman and Dallas Medical, was unenforceable against St. Paul. Non-assignment clauses, such as the one in the St. Paul policy, have been consistently enforced by Texas courts. The summary judgment record conclusively establishes that Hoffman never received written consent from St. Paul when it assigned its interest in the St. Paul policy to Dallas Medical. Without an assignment approved by St. Paul in writing, it cannot pursue Hoffman’s claims arising out of the denial of its insurance claim against St. Paul.
The guiding principle governing the interpretation of insurance policies is to give effect to the parties intent as expressed in the policy’s plain language. The clear language of the policy provision prohibits the insured from assigning its interest in the policy. Such interest necessarily includes Hoffman’s right to any insurance claim proceeds. Moreover, contrary to its argument on appeal, their own summary judgment evidence included the affidavit of Jim Blamer who stated “All rights [Hoffman] had under any insurance policies were assigned to [Dallas Medical] at closing.” To the extent they claim the policy’s non-assignment clause is an illegal restraint on freedom of contract and void against public policy, it is noted that they have provided no authority to support their position. Accordingly, they have waived this argument.