Assignment of Rights under an Insurance Policy
A recent Tennessee Court of Appeals case reminds us that an insured can assign its contract rights without the insurer’s consent even if the insurance contract contains an anti-assignment clause. In Manley v. The Automobile Ins. Co., the insured held an insurance policy on a home was damaged by a tornado. The insured then sold the home and assigned the policy to another individual, who made a claim for the damage against the insurer. The Court ruled that the assignment was valid because it took place after the insurable loss occurred. An important note: the assignee must comply with the terms and conditions of the policy, as the assignee merely stands in the shoes of the assignor.
Also, note the Court’s discussion of defective verdicts, either due to inconsistent findings of fact or a faulty verdict form. In any case, the attorneys should do as much as they can to avoid a problematic verdict by raising the issue to the trial judge. Even if unsuccessful in changing the instruction or verdict form at the time, it is far better to preserve the issue than to have it waived on appeal for failure to timely object.