All insured persons should review their insurance policies before transferring any rights to third parties under their property insurance. Some policies include clauses on this issue and restrict the transfer or transfer of rights during a claim.
This was the case in a recently decided Puerto Rico Court of Appeal, Consejo de Titulares del Condominio Torre de San Miguel y otros v QBE Seguros. 1 The insurance company QBE filed a claim to dismiss the insurance claim against them for damages caused by Hurricane Maria to the condominium because the insured was added as a third party Attenure Holdings Trust 3 [Attenue] and HRH Property Holdings LLC [HRH] in violation of the policy allocation clause. The plaintiff claimed that these companies are established in Puerto Rico to provide financial assistance to the insured and take on the responsibility to continue with the insurance claims related to damages caused by Hurricane Maria, in exchange for an indivisible interest on the claim. The plaintiff therefore claimed that both Attenure and HRH were co-plaintiffs.
The Motion to Dismiss argued that the policy expressly prohibited any transfer or transfer of rights without the insurance company's consent and that the transfer to Attenure and HRH was therefore invalid and their claim could not continue. The plaintiff claimed that the transfer was valid under Puerto Rico's civil law, which states that the transfer of rights can be made retrospectively (after injury) and that rights can be transferred freely except when the contrary is determined by contract. Most U.S. courts have also held that anti-transfer clauses do not prevent policyholders from transferring their claims after the loss because they do not add damages to what the insurer would pay under the insurance coverage.
Puerto Rico Court of Appeals. considered that when there is no doubt about the language of an agreement, it should apply, and in this case the policy was clear as to what consent was needed from the insurance company to proceed with valid assignments or transfers. The court declared the lease between Attenure, HRH and the plaintiff invalid and therefore declared that they had no active position to bring an action. v. QBE Seguros 2012 TA 1182 (2021).