In Pepsi Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Co. of Wausau, 979 N.W.2d 627 (Wis. App. 2022), the Wisconsin Court held an occurrence-based policy’s anti-assignment clause was ineffective to preclude assignment of policy benefits for losses sustained before the policies were assigned. As a result, the insurance company that issued the occurrence policy was required to defend various asbestos suits brought against a successor entity of the original insured.
Under the facts of this case, the Court found that individual claimants were exposed to asbestos which was contained in the original insured’s product, thereby causing loss during the policy period. The insurance policy’s anti-assignment provision was not enforceable in a suit brought against a successor entity of the original insured. First, the Court noted that the asbestos exposure constituted an “occurrence” within the meaning of the involved policies. That occurrence triggered coverage. The loss occurred before the insurance policies were assigned as part of a transfer of assets and liabilities to the successor entity. Under Wisconsin law, the Wisconsin courts had previously held that anti-assignment provisions in insurance policies did not preclude assignments that occurred after a loss had taken place. The Wisconsin Courts had noted that the purpose of anti-assignment clauses was to protect insurers against greater risks than what they contracted to cover. However, after a loss had occurred, any assignment of the policy did not increase the risk. Therefore, as a matter of public policy, anti-assignment clauses in insurance policies not prevent assignment after a loss had occurred.