Insurers can’t use anti-assignment clauses to block contractors from stepping in on post-loss claims, Maryland’s highest court ruled on July 24.
The decision in In the Matter of the Petition of Featherfall Restoration, LLC comes as a clear signal to insurers: post-loss assignments are valid, even when policy language appears to say otherwise. The ruling is expected to affect how property and casualty insurers write and enforce claims provisions, particularly in states with similar legal frameworks.
The dispute began after Travelers Home and Marine Insurance Company denied a homeowners claim for roof damage allegedly caused by a 2019 storm. The homeowners had hired Featherfall Restoration, which was present at the inspection arranged by Travelers in 2020. After the claim was denied, the homeowners executed a document transferring their claim rights to Featherfall. Travelers refused to recognize the assignment, pointing to a clause in the policy that stated, “Assignment of this policy will not be valid unless we give our written consent.”
Featherfall took the matter to the Maryland Insurance Administration, which backed Travelers, ruling that the assignment was void. That decision was upheld in the lower courts until the Supreme Court reversed course.
Writing for the court, Justice Steven Gould clarified the distinction between an insurance policy and a post-loss claim. The policy itself, he noted, sets the contractual terms between insurer and insured. A claim, however, is a separate matter – it’s a request for payment under the policy and, critically, it can be assigned after a loss has occurred.
According to the court, a post-loss claim is considered a “chose in action,” a property right that can be transferred. Since the homeowners were not assigning the policy itself – just the rights to a specific, already-filed claim – the anti-assignment clause didn’t apply.
The court also took issue with how the MIA handled the complaint. By refusing to recognize Featherfall’s role, the agency effectively shut the door on the contractor’s participation in the claims process. That, the justices said, warranted a second look. The case has now been sent back to the MIA for further review on whether Travelers violated state law by refusing to communicate with the assignee.
For insurers and claims professionals, the takeaway is practical. If a claim has already been filed and loss occurred, policyholders may have the right to assign that claim – regardless of anti-assignment language. The ruling invites insurers to revisit policy wording and adjust internal protocols around third-party interactions after a loss.
Though the court didn’t weigh in on whether the damage claim itself was valid, the July 24 decision reshapes how far an anti-assignment clause can reach in Maryland – and potentially beyond.
