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Too Much <i>Fluor?</i> California Supreme Court Overturns <i>Henkel</i>
Consent-to-assignment clauses are integral features of most commercial general liability (“CGL”) policies because they eliminate the potential burden of unknown parties seeking insurance coverage for liability that an insurer did not foresee or intend to cover. Pursuant to these clauses, an insured cannot assign its interest in insurance benefits to another party without the insurer's consent. Given their salutary purposes, California courts have historically upheld the validity of these consent-to-assignment clauses in CGL policies, even in situations where the event giving rise to liability occurred prior to the putative assignment. However, the California Supreme Court recently reversed course and overturned one of its earlier decisions, rejecting consent-to-assignment clauses as a bar to coverage where the loss at issue pre-dates the assignment.
This article: 1) provides an overview of consent-to-assignment clauses in CGL policies; 2) discusses the California Supreme Court's decision in Henkel; and 3) examines the California Supreme Court decision in Fluor Corp. v. Superior Court and its impact on the enforceability of consent-to-assignment clauses.
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