Assignment of Policy

It is said that "On the sale of a thing insured, no interest in the policy passes to the vendee, unless at the time of the sale, the policy be assigned expressly or impliedly." Per Quain, J in The North of England Pure Oil-Cake Company v The Archangel Maritime Insurance Company (1875) LR 10 QB 249. In order to critically analyse and discuss the foregoing statement, it is necessary to examine what constitutes a valid assignment through the use of decided cases and relevant statutory provisions.

In The North of England Pure Oil-Cake Company v The Archangel Maritime Insurance Company, a cargo of linseed to be transported by sea was insured by Vagliano Brothers which belonged to them. The policy was expressed to be for the benefit of Vagliano Brothers as well as the assignees. Furthermore, the policy was to cover every stage of the voyage as if each stage of the voyage were separately insured. Whilst the brig was still on her voyage, Edwards & Co., who then acted as the agents of Vagliano Brothers, sold to the plaintiffs the cargo of linseed. Subsequently, as a consequence of perils confined within the terms of the policy, part of the cargo was sunk. The above-named loss occurred when a part only of the cargo had been discharged, and before the plaintiffs had paid the price of the cargo. Afterwards the firm assigned the policy to the purchasers of the linseed. The issue which consequently arose was whether upon the above facts the plaintiffs are entitled o recover from the defendants the said loss.

Cockburn C.J. in this case held:

"We are agreed on one point, which entitles the defendants to judgment, viz. that, the policy not having been assigned until after the interest of the assignors had ceased, an effective assignment was impossible."

The law governing insurance policies has strict provisions for the transfer of the rights and duties in respect of the policy, from one individual to another. Under a contract of insurance, such a transfer is referred to as the assignment of the policy. Unless the terms expressly prohibit the same, a marine insurance policy may be transferred by assignment. The policy may be assigned either before or after loss . Section 50 (2) of the Marine Insurance Act 1906 provides that it is possible for the assignee to sue in his own name, however an assignee of a contract may generally sue directly on the contract . At the time of assignment, the assignor must possess an insurable interest in the subject matter insured. An insured that has parted with or lost interest in the subject matter insured cannot make a valid assignment . After the occurrence of the loss, the policy can be assigned freely to any person. The assignor merely transfers his own right to claim to the assignee. If the assured has parted with his interest in the subject matter it will not automatically transfer to the assignee, the assignor's rights under a contract