Do you know what is assignment in insurance?
Assignment in insurance means the legal or general transfer of property from one individual to another. Basically, an assignment is done with the legal intention of generating banking loans or from any other reputable financial organization.
Therefore, a dictionary meaning of assignment is ” The act of assigning, fixing, or specifying, the writing by which an interest is transferred.”
The law on the subject of the assignment is a little complicated, and the procedure differs depending on whether the thing to be assigned is a choice in possession, that is, a tangible object such as a motor car, or a choice in action, that is an intangible right or interest in the property, such as an interest in a life assurance policy.
It is very clear that there is a great difference between the assignment of a legal choice in action and the assignment of an equitable choice in action. However, it’s necessary we do not endanger ourselves with these complicated rules. For a better understanding, assignment means the transfer of rights under an insurance contract from one person to another.
The 3 major definitions of assignment
— Ordinarily, assignment is the task of transferring the legal control of a policy (property) to another party called the assignee in line with the agreement reached before the transfer was made. However, if the policyholder is dead, the assignee will retrieve the policy money from the insurance company.
— Assignment can be defined as the act of delegating the ownership and control of an asset from one person to another.
— Assignment is the act of assigning, fixing, or specifying, the writing by which an interest is transferred. Note, the only important word that defined what assignment is all about is “TRANSFER.”
The distinction between assignment of the policy and assignment of the proceeds of the policy, assignment of marine insurance policy, assignment of life policies & assignment of all other property insurance policies.
a. Assignment of the proceeds of the policy: This happens when the policyholder transfers his right to receive the proceeds of the policy to another individual by informing the insurer to pay any money due under the insurance policy to another person.
All policies are easily assignable except where the contract specifically provided otherwise. As far as the insurer is concerned, it does not matter who received the money he must pay provided there are zero clauses in the contract restraining him from doing so.
b. Assignment of the policy: This happens when the exact insured is substituted by somebody else and the contract still remains in force. All policies can be assigned in this way. However, depending on the type of insurance, the insurer’s consent must be obtained beforehand.
Whether or not an insurance policy may be unilaterally assigned by the insured depends on whether or not a particular insurance contract is a personal contract. If the contract is a personal contract, the policy is not assignable, but if it is not a personal contract, the policy may be assigned at will.
c. Assignment of marine insurance: According to section 51 of the marine insurance act, 1961, states marine insurance policies are assignable either before or after a loss and in such a case the beneficial interest would pass to the assignee who then is entitled to sue in his own name. The procedure or guiding principles in the activities of the assignment are all contained in this Act.
d. Assignment of life policy: Life policies are assignable because the law regards them as reversionary interests, that is, interests in the property the enjoyment of which is deferred to a future date.
e. Assignment of all other property insurance policies: As elucidated above, all motor, fire, and other accident insurance policies in respect of the property are personal contracts and are therefore not assignable. They can only be assigned with the consent of the insurer. What actually takes place is not an assignment, but the making of a new contract, a novation.
f. Individual or personal contract: This is called a personal or individual contract because they are personal to the parties involved. However, the policy is personal to the particular insurer and the individual insured concerned, and it relates to the personal interest of the insured in the subject matter of the insurance.
Assignment in insurance means the legal or general transfer of property from one individual to another.
Ordinarily, assignment is the task of transferring the legal control of a policy (property) to another party called the assignee in line with the agreement reached before the transfer was made. However, if the policyholder is dead, the assignee will retrieve the policy money from the insurance company.