Over the past 6 years it had become usual practice that EQC and private insurance claims were assigned to the purchaser upon a sale if the parties both agreed. Previously private insurers had been happy to allow the assignment of these claims provided a valid Deed of Assignment was entered into by the parties.
We have touched on this in our August newsletter, but it is important that you are aware of the developments in this area. In our experience it is now uncommon for most private insurers to accept Deeds of Assignment for the residual benefits of claims that have previously been settled. We are also aware that different insurers are taking different positions as to whether they will allow the assignment of claims which are still open.
IAG in particular has now made a business decision to no longer accept any Deeds of Assignment that intend to transfer claim entitlements to the property's new owners. This will of course have a major bearing on how you, as agents, will prepare contracts and market properties.
When you are tasked with marketing a property that has an IAG claim (whether the claim has been settled or is still open), you will now need to be aware that that it will not be possible for the vendor to assign the IAG claim to the new owners. IAG will not accept whatever assignment is presented to them even if the vendor has represented to the purchaser that an assignment would be possible.
If the property is insured through an insurer other than IAG then it is important that the vendor obtains their insurer's consent to assign the insurance claim(s) before the vendor makes any promises to the purchaser.
Put simply, our view is that the default position should be that a claim cannot be assigned unless the vendor has obtained the written consent of their insurer.
Accordingly, it is also important that purchasers and vendors are also aware of this from the outset so that there are no false expectations, particularly if someone is under the assumption they can rely on the claim going forward to fix a driveway, for example. If the parties' expectations are clear at the outset then you can avoid a messy situation where a purchaser discovers they can't in fact obtain rights to a claim they expected to receive.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.