Revisiting Non-Assignment Clauses: California Returns to the Majority Rule

In 2003, the Supreme Court of California departed from the majority rule and denied a successor entity the right to its predecessor’s insurance despite the fact that the underlying loss predated the assignment of insurance rights. At the time, it appeared that the decision in Henkel Corp. v. Hartford Accident & Indemnity Co might be the start of a trend toward the minority rule. But recently, in Fluor Corp. v. Superior Court, the Supreme Court of California overruled Henkel, and it now appears that courts are trending back toward the post-loss exception rule followed by a majority of jurisdictions. In this article, partner Howard B. Epstein and special counsel Theodore A. Keyes discuss recent cases that examine enforceability of non-assignment clauses in insurance policies.