POST-LOSS ASSIGNMENT CLAUSE FOUND AMBIGUOUS

The New Hampshire Supreme Court in Keene Auto Body, Inc. v. State Farm Mutual Auto Insurance Co., 293 A.3d 1146 (NH 11/15/22) held that an insurance policy’s anti-assignment clause which precluded assignment of any benefits under the policy without State Farm’s approval was ambiguous and, therefore, was to be construed against State Farm.  The Court noted that a reasonable insured would likely understand the reasoning behind the insurer’s prohibition of assignment of policy benefits and rights pre-loss inasmuch as an undesirable assignee could increase the loss by failing to pay premiums or engage in risky liability behavior.  However, with respect to assignments of post-loss claims, which did not impact the insurer’s risk, the Court noted that a reasonable insured would not likely understand why the anti-assignment clause would restrict assignment for those type of claims.  The Court found that this reasonable disagreement between contracting parties led to a conclusion that at least two interpretations of the policy’s language existed, thereby making the policy ambiguous.