Risk Management

Successor company entitled to insurance payments

Judy Greenwald

February 02, 2017 Reprints

Coverage Disputes General liability P/C Insurers More + Less -

Successor company entitled to insurance payments

In a case that involves some $500 million in insurance coverage, the New Jersey Supreme Court has ruled a successor company is entitled to the proceeds of dozens of insurance policies despite their “no assignment” clauses because the insured loss had already occurred when the assignment was made.

East Hanover, New Jersey-based plaintiff Givaudan Fragrances Corp. faces liability as a result of environmental contamination from a manufacturing site that a related corporate entity operated in a Clifton, New Jersey from the 1960s through 1990, according to Wednesday’s 6-0 ruling by the New Jersey Supreme Court in Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co. et al.

“Defendants essentially claim that they insured Givaudan Corporation as their named insured, not Fragrances,” says the ruling by the Trenton, New Jersey-based court. “Defendants assert that any assignment to Fragrances is invalid because defendants did not consent to this assignment. Defendants maintain that their consent was required for a valid assignment according to the language of the insurance policies.”

The New Jersey Supreme Court disagreed, however, with a ruling that affirmed a 2015 ruling by the Superior Court of New Jersey, appellate division in Trenton. That court had reversed a 2012 ruling by the state superior court in Morristown, New Jersey, on the issue.

The New Jersey Supreme Court ruling said, “We hold that, once an insured loss has occurred, an anti-assignment clause in an occurrence policy may not provide a basis for an insurer’s declination of coverage based on the insured’s assignment of that right to invoke policy coverage for that loss.”

The ruling said, “The environmental contamination occurrence — and resultant loss — took place during the relevant policy periods. The assignment does not alter the insurers’ liability for indemnifying the underlying insured event.”