Because the covered “occurrence” had already happened when an insured assigned its rights under its expired commercial liability policies to its successor in interest, pursuant to the post-loss exception, now adopted by this court, the insurers’ consent was not required for the assignment of rights.
We reverse summary judgment for the respondent-insurers and remand for further proceedings on the coverage claims of petitioner, the insured company’s successor in interest.
At issue are commercial liability policies issued decades ago to a company, which has recently been adjudged (in federal court) to have environmentally contaminated its land. When the company was sold, it assigned its rights under the expired policies to its successor in interest. Those policies had anti-assignment provisions and required the insurers’ consent to any assignment.
However, the court now adopts the majority rule and applies the post-loss exception: an assignment after a loss has already occurred does not require an insurer’s consent.
Courts have recognized the post-loss exception because the purpose of a no-assignment clause is to protect the insurer from increased liability, and after events giving rise to the insurer’s liability have occurred, the insurer’s risk cannot be increased by a change in the insured’s identity. Additionally, the post-loss exception recognizes that a consent-to-assignment clause cannot bar an insured from transferring the right to coverage that exists after a loss takes place.
We agree with the majority of jurisdictions and hold the “loss,” in the context of the post-loss exception, is synonymous with the “occurrence.” In this case, any loss occurred before the original insured executed the assignment in 1986. We therefore reverse the Court of Appeals’ holding that the loss does not take place until the insurer’s obligation to pay is fixed by a judgment against the insured.
An insured’s claim to coverage does not have to be reduced to a sum due or to become due under the policy for the claim to be assignable without insurer consent. After an occurrence, the insured possesses a contingent right to coverage, and it is a right that may be assigned without insurer consent.
The insurers argue that their risk was actually increased because, during the federal litigation, petitioner sought to cast blame for the contamination on the original insured. However, petitioner’s allegations did nothing to change respondents’ risk, which became fixed at the time of the loss.
Moreover, relieving respondents of their contractual duty to provide coverage would give respondents a windfall. As petitioner argues, the risks at issue were factored into the original underwriting of the policies, and the premiums paid by the insured were in exchange for coverage against the same risks. If the assignment is voided under these circumstances, respondents would receive the windfall of never having to insure occurrences they received premiums for covering.
Reversed and remanded.
(Few, J.): I write separately to express my dismay at respondents’ reliance on the meaningless phrase “chose in action” as a basis for their position.
PCS Nitrogen, Inc. v. Continental Casualty Co. (Lawyers Weekly No. 010-016-22, 15 pp.) (George James, J.) (John Few, J., concurring) Appealed from Charleston County Circuit Court (Thomas Cooper, J.) On writ of certiorari to the Court of Appeals. William Howell Morrison, Sarah Spruill, Michael Ginsberg and Matthew Divelbiss for petitioner; Morgan Templeton, Patrick Hofer, J.R. Murphy, Adam Neil, Wesley Sawyer, Christian Stegmaier, Scott Wallinger, John Favate, Edward Pritchard, Richard McDermott, Seth Jaffe, John Lay, Laura Jordan, Helen Franzese, Elizabeth Palmer, Molly Poag, Harry Lee, John Bonnie, Michael Ethridge, Suzanne Chapman, Wayne Karbal and Paul Parker for respondents; Matthew Gerrald and Laura Foggan for amicus curiae. S.C. S. Ct.