Do Third Parties have Any Rights in an Insurance Claim?

All insureds should review their insurance policies before transferring any rights to third-parties under their property insurance. Some policies include clauses regarding this matter and limit the assignment or transfer of rights under a claim.

This was the case in a recent Puerto Rico appellate court decision, Consejo de Titulares del Condominio Torre de San Miguel y otros v. QBE Seguros.¹ The insurance company, QBE, filed a motion to dismiss the insurance claim against them for damages caused by Hurricane Maria to the condominium because the insured added as a third-party Attenure Holdings Trust 3 [Attenue] and HRH Property Holdings LLC [HRH], contrary to the policy’s Assignment Clause. Plaintiff alleged these companies are established in Puerto Rico to provide financial help to insureds and assume the responsibility to proceed with the insurance claims related to damages caused by Hurricane Maria, in exchange for an indivisible interest over the claim. Therefore, Plaintiff maintained that both Attenure and HRH were Co-Plaintiffs.

The Motion to Dismiss alleged that the policy expressly prohibited any assignment or transfer of rights without the insurance company’s consent and therefore the assignment to Attenure and HRH was invalid, and their claim could not proceed. The Plaintiff alleged the assignment was valid under Puerto Rico’s Civil Code that states transfer of rights can be made post-lost (post-damage) and that rights can be transferred freely except when contrary established under contract. Also, most United States courts have held that anti-assignment clauses do not prevent insureds from transferring their claims after the loss because it does not add damages to what the insurer would pay under the policy coverage.

The Puerto Rico Court of Appeals held that when there is no doubt of the language in a contract it should apply, and in this case the policy was clear regarding the consent needed from the insurance company to proceed with valid assignments or transfers. The court declared null the assignment contract between Attenure, HRH, and the Plaintiff and therefore, declared they did not have active standing to sue.
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¹ Consejo de Titulares del Condominio Torre de San Miguel y otros v. QBE Seguros, 2012 TA 1182 (2021).