Since Henkel, several courts have addressed the successor liability issue. Some have held that the non-assignment provision in an insurance policy does not prohibit the insured, without the insurer’s consent, from assigning rights accrued under the insurance policy after the occurrence of a loss. Under these circumstances, the courts have held that the insured was not assigning the policy itself, but was assigning its rights to recover under the insurance policy – assigning its “chose in action.” The courts recognized that there was no increased risk of hazard to the insurer as a result of the assignment of the accrued claim. Other courts have followed Henkel.
Ohio does not follow the Henkel decision. In Pilkington N. Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St.3d 482, 861 N.E.2d 121 (2006), the Ohio Supreme Court specifically rejected Henkel and held that “a chose in action arises under an occurrence-based insurance policy at the time of the covered loss. The distinction created in Henkel does not align with the obligations recognized in Ohio that the insured’s right to recover arises automatically at the time of loss.” Id. Thus, the anti-assignment clause in a policy does not prevent assignment when the loss has already occurred.
Since their success in Henkel, insurers have aggressively argued the applicability of anti-assignment clauses in their policies as a basis to deny coverage to successor companies. Companies need to be aware of the law in the various jurisdictions prior to undertaking their corporate transactions in order to potentially avoid the pitfalls of the Henkel decision.