The Minnesota Supreme Court finally issued a decision in the
case regarding anti-assignment clauses in auto insurance policies. The case was
argued before the court in January 2009. They determined that anti-assignment
clauses do not prevent policyholders from assigning to auto glass vendors the
right to arbitrate disputes regarding auto glass claims. You can view the
decision at www.mncourts.gov.
Four district court cases, involving four different auto
glass shops and four different insurance companies were combined in this
case.
Insurance policies generally contain anti-assignment clauses;
the clauses protect insurers from covering individuals and risks not covered by
the policy. Insurers sought to extend this protection to post-loss assignment
of benefits. Post-loss assignment is a longstanding practice in Minnesota and
across the country. In arguments before the court insurers were unable to
identify even one state where post-loss assignment was
prohibited.
In addition to the four appellants, a number of auto glass
companies united to support this action. The ability to arbitrate disputes
using the Minnesota no-fault arbitration mechanism was in question. This
decision removes questions about the standing of auto glass companies in
arbitration, reaffirms that insurance proceeds “are subject to no-fault
arbitration after assignment” and that policyholders themselves do not need to
be party to any arbitration.
At least one insurer has adopted policy language that
specifically prohibits post-loss assignment of benefits in Minnesota. This
decision invalidates that language.
The decision is a clear and decisive victory.
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