On August 20, 2015, in Fluor Corp. v. Superior Court (2015) 61 Cal.4th 1175 (Fluor), the California Supreme Court unanimously overruled its prior decision in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934 (Henkel), which had created a barrier to the transfer of insurance rights during mergers, acquisitions, and restructurings. In Henkel, the Court upheld the enforceability of a “consent-to-assignment” clause (generally included in insurance policies) to bar coverage for losses that predated the assignment. The Court did not, however, consider the application of Insurance Code section 520 (Section 520) to such clauses. In a lengthy opinion, the Court opined Henkel was in conflict with Section 520, holding that, “after personal injury (or property damage) resulting in loss occurs within the time limits of the policy, an insurer is precluded from refusing to honor an insured’s assignment of the right to invoke defense or indemnification coverage regarding that loss.” (Fluor at p. 1224.)
Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.