The Hawaii Supreme Court just held yesterday that insurance policies with an “assignments require consent” clause cannot be assigned without the insurance company’s consent.  In Del Monte Fresh Produce (Hawaii), Inc. v. Fireman’s Fund Ins. Co. the Hawaii Supreme Court expressly held an assignment will not occur as a matter of law, but rather only by the policy’s term.

A concurrence, written by Justice Acoba and joined by Justice Duffy, would have reached the same result but concluded that “an explicit conveyance by contract is but one way to transfer insurance benefits.”  Thus, the concurrence would have held that an analysis of the insurance contract language itself is not always dispositive.

In my opinion (and I will attempt to expound upon this opinion later), the majority decision is deeply flawed.  As a pragmatic matter, it is virtually impossible to contact an insurance company several years after a policy is written.  Moreover, it is highly unlikely — assuming you were to find a contact person — that an insurance company would ever consent to an assignment.  Thus, this ruling effectively states that insurance policies can not be assigned. 

One has to wonder why the majority reached this conclusion.  An insurance company does not need to be insulated from pre-sale activities that it voluntarily and contractually agreed to cover.  On the other hand, this ruling will have a chilling effect on the sale or transfer of a company with any potential product or environmental liability regardless of the fact that the company had dutifully obtained insurance coverage for these risks.