Insurance policies typically do not permit assignment of the policy to third persons without the insurer’s consent. In Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co., 2015 N.J. Super. LEIXS 131 (App. Div. Aug. 12, 2015), in a published decision, the Appellate Division decided the issue as to whether the plaintiff may be assigned the rights under insurance policies issued years earlier to one of the assignor’s predecessor corporations.
These insurance policies were issued to a predecessor corporation (Givaudan Corporation) between 1964 and 1986. It later merged into the Givaudan Flavors Corporation. The plaintiff claimed that, due to an assignment, it was covered by such policies. The insurers disputed the claim and contended that the plaintiff was not insured under any of the policies.
This case involved environmental claims against the plaintiff for a hazardous discharge of a predecessor corporation. In August 2004, the plaintiff was notified by the EPA of potential liability under CERCLA for such discharge. In 2005, the DEP commenced an action against several companies that had operated sites within the contaminated area. In February 2009, two of the defendants in this DEP action filed third-party contribution claims against more than 300 entities, including the plaintiff.
In March 2010, the Givaudan Flavors Corp. (“Flavors”), a successor by merger to the Givaudan Corp., assigned its rights to these policies to the plaintiff Givaudan Roure Fragrances Corp. (“Fragrances”), the entity sued in this DEP action. Hence, Fragrances claimed that it was an insured under these policies.
The Appellate Division pointed out that these policies were occurrence policies. Once the occurrence takes place, coverage attaches even though the claim may not be made for years afterwards. While these policies contained provisions that they could not be assigned without the insurer’s consent, once a loss occurs, an insured’s claim under a policy may be assigned without the insurer’s consent.
The purpose of a no assignment clause is to protect the insurer from having a different risk than what the insured intended when it issued the policy. However, if there is an assignment after a loss has occurred, the insurer’s risk is the same because the liability of the insurer becomes fixed at the time of the loss. Moreover, at that point, an assignment of rights to collect under a policy is not a transfer of the actual policy but a transfer of the right to a claim of money.
The Appellate Division found that any loss that occurred during the policy period of any of the policies, clearly occurred long before the assignment in 2010. Thus, Flavors did not require the insurer’s consent to assign its rights under the policies. Thus, the court found that the carriers were obligated to provide coverage to the plaintiff.
