Despite most insurance policies explicitly forbidding assignments without consent, Florida courts have routinely upheld the assignment of post-loss claims regardless of the insurer’s consent. “The policy was assigned after loss, and it is a well-settled rule that the provision in a policy relative to the consent of the insurer to the transfer of an interest therein does not apply to an assignment after loss.” W. Florida Grocery Co. v. Teutonia Fire Ins. Co., 77 So. 209, 210-11 (Fla. 1917).

The Teutonia decision dealt with a post-loss assignment of a defined amount of insurance proceeds. In fact, the insurer had already deposited the proceeds into a deposit account prior to the initiation of the lawsuit. While the Court appeared to leave little doubt that in the case of post loss assignments, a non-assignment clause was not enforceable, the issue of whether or not a claim was adjusted prior to assignment will become a point of distinction in modern case law.

While the issue of post loss assignments appeared well settled, the Florida Supreme Court again addressed the issue in Lexington Ins. Co. v. Simkins Indus., Inc., 704 So. 2d 1384, 1385 (Fla. 1998). In Lexington, the Florida Supreme Court determined non-assignment clauses may still be enforceable. “Accordingly, based on the unambiguous language of the statute and the policy, we hold that the policy’s non-assignment clauses are dispositive and WAK’s purported assignment of the policy was ineffective.” Id. at 1386.

The statute referenced by the Court in Lexington was Section 627.422, Florida Statutes, which states:

A policy may be assignable, or not assignable, as provided by its terms. Subject to its terms relating to assignability, any life or health insurance policy under the terms of which the beneficiary may be changed upon the sole request of the policy-owner may be assigned either by pledge or transfer of title, by an assignment executed by the policy-owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment, until the insurer has received at its home office written notice of termination of the assignment or pledge or written notice by or on behalf of some other person claiming some interest in the policy in conflict with the assignment.

§ 627.422, Fla. Stat.

In light of Lexington, most courts have interpreted this statute to apply to the actual insurance policy and not post-loss claims; however, some Florida courts are starting to recognize that while the right to receive proceeds from an insurance policy might be assignable not withstanding the presence of non-assignment clause, the amount of proceeds owed must first be determined or the claim adjusted before a valid assignment of claim takes place. Most recently, Judge Wayne Durden of Florida’s 10th Judicial Circuit (Polk County) ruled a homeowner’s assignment of rights prior to the adjustment of loss was prohibited by the policy language requiring the insurer’s consent to any adjustments. Specifically, Judge Durden’s order reasoned this assignment prior to adjustment assigned the right to adjust the claim to a non-party to the contract. As a result, the assignment was invalid. While the decision is still on appeal, it does illustrate that not all assignments are created equal and the timing of such an assignment can ultimately determine the validity of such an assignment.

Before accepting an assignment of rights, claims professionals should determine what details of the claim were worked out prior to the purported assignment taking place. While Florida law still recognizes the validity of an assignment of a fully adjusted claim, an assignment prior to adjustment may not be valid. Absent a valid assignment, any non party attempting to sue under the insurance contract would lack proper standing and their case should be subject to dismissal.