A homeowner’s insurance policy prohibited the assignment of rights and duties without the insurer’s consent. In Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., the Nebraska Supreme Court decided whether the prohibition stands.
Farm Bureau Property & Casualty Insurance Company (Farm Bureau) issued a homeowner’s insurance policy to Howard Hunter. It included a non-assignment clause: “All rights and duties under this policy may not be assigned without our written consent.” While the policy was active, a storm damaged Hunter’s house and he filed a claim. Hunter hired Millard Gutter Company (“Millard”) to fix his roof. Millard thought the entire roof should be replaced, Farm Bureau thought parts needed to be replaced. Millard’s estimate was $8854, and Farm Bureau planned to pay $3022. Millard replaced the entire roof. Hunter signed an “Assignment of Claim” so that Millard could go after Farm Bureau for the money. Hunter did not ask for or get consent for the assignment from Farm Bureau, yet Farm Bureau, when presented with the assignment, wrote a check directly to Millard for $3022.
Millard sued Farm Bureau for the rest. Farm Bureau had several defenses: first, it did not consent to the assignment, second, Millard was not the party in interest, and third, there was no privity of contract between Millard and Farm Bureau. Farm Bureau also argued the county court had no subject matter jurisdiction. The county court ruled in favor of Millard, and the district court affirmed.
The Nebraska Supreme Court took on the question of the assignment and whether Millard had standing to sue Farm Bureau. The majority of courts follow the rule that clauses in insurance policies prohibiting assignments do not prevent an assignment after the loss has occurred. The Court determined there was no added risk to Farm Bureau in the case of the assignment AFTER the loss, and that the standard in the gutter and roofing industry was for the homeowner to assign his proceeds from an insurance company to the contractor and for the insurer to make direct payment to the contractor.
The Court determined that assignment of a claim under a homeowner’s insurance policy for the homeowner’s property damage casualty loss is valid, despite a non-assignment clause. Because the assignment in this case was valid, the judgment in favor of Millard is affirmed.
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