Oklahoma Supreme Court Holds Insured’s Post-Loss Assignment of Property Insurance Claim Was An Assignment Of Chose In Action Rather Than Assignment Of A Policy

The Oklahoma Supreme Court reversed a trial court’s finding that an insured’s post-loss assignment of policy proceeds to requires the insurer’s written consent. Johnson v. CSAA Gen. Ins. Co., Case No. 118689 (Okla. Dec. 15, 2020). 

The insured filed a claim with her insurer for damage to her home, after which she assigned her claim to a construction company that repaired her home. The construction company and the insurer disagreed as to the amount of property damage sustained, and the insured and the construction company sued the insurer, alleging breach of contract and bad faith. The insurer moved to dismiss the construction company’s claim, arguing that its policy and 36 O.S. § 3624 prohibit assignment of the policy. The trial court agreed. The insured dismissed her suit without prejudice, but the construction company appealed. 

The issue before the Oklahoma Supreme Court was whether an insured may execute a post-loss assignment of a chose in action when the insurer’s policy restricts assignment of the policy. The Court, conducting an in-depth survey of the law, concluded that the insured’s post-loss assignment did not violate the policy’s terms, reasoning that while the general rule is that insurance contracts are personal in nature and must be enforced as written, a commonly accepted exception exists for post-loss assignments. That is, when the subject of a post-loss assignment is not the policy and its coverage, but rather a right to receive funds for a covered loss, such an assignment may be validly transferred to a third party without requiring the insurer’s consent. The Supreme Court’s holding follows the majority view that anti-assignment clauses serve to protect the insurer from increased liability, but after the occurrence of events vesting the insurer’s liability, the insurer’s risk cannot be increased by a mere change in the insured’s identity.