Assignment of Policy Note

In the realm of maritime insurance, the assignment of policy means

the legal process of ceding the entitlements and benefits of an insurance
policy from the original policyholder to a third party.

In relation to this Section 50 of The Marine Insurance Act 1906 provide

(1)A marine policy is assignable unless it contains terms expressly

prohibiting assignment. It may be assigned either before or after loss.

(2) Where a marine policy has been assigned so as to pass the beneficial
interest in such policy, the assignee of the policy is entitled to sue thereon in
his own name; and the defendant is entitled to make any defence arising out
of the contract which he would have been entitled to make if the action had
been brought in the name of the person by or on behalf of whom the policy
was effected.

(3)A marine policy may be assigned by indorsement thereon or in other

customary manner.

Illustrations

Action on policy on ship by innocent assignee. The defendant (the

insurer) may plead non-disclosure of a material fact by the assured (the
assignor).

The principal that the assured who has no interest cannot assign can
be see in Section 51 of The Marine Insurance Act 1906 states as “Where
the assured has parted with or lost his interest in the subject-matter insured,
and has not, before or at the time of so doing, expressly or impliedly agreed
to assign the policy, any subsequent assignment of the policy is inoperative.

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Provided that nothing in this section affects the assignment of a policy after
loss.”

Illustrations

A, B, and C each own a third share of a ship. A and B jointly insure

their shares under a policy for £500. Afterwards B sells his share to C, but
no arrangement is made as to the policy. The ship is lost. Only A’s share
(£250) can be recovered from the insurer.

In the case of William Pickersgill & Sons, Ltd. v. London and

Provincial Marine and General Insurance Co., Ltd. [1912], “The
assignors of a marine insurance policy failed to disclose a material fact to the
insurance company. The insured vessel was lost, and the assignees of the
policy who did not know of the non-disclosure claimed against the insurance
company.”

Held that, the insurance company was entitled to rely on section 50(2)
and avoid liability under the policy on the ground of non-disclosure even
against an innocent assignee.

In the case of Williams v. Atlantic Assurance Co., Ltd. [1932] “An

unvalued policy to the extent of £8,000 was effected for cases of textile
goods on a voyage from Alexandria. The goods were lost at sea. The
plaintiff had established a claim against the firm for f7,000. The claim was
settled on the terms that “the policy was assigned to him, the firm retaining
the right to receive the first £1,000 of any sum recovered”. The plaintiff sued
the insurance company in his own name, but the Court Appeals held that the
action failed because he had not proved the value of the goods which had
been lost.

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 Held that, the assignment to the plaintiff did not pass to him the whole
beneficial interest, and that, since he was mere equitable assignee, he could
not sue on the policy without joining assignors as co-plaintiffs.

The assignment of policy in marine insurance involves the legal

transfer of insurance rights and benefits from one party to another. This
process typically occurs when there is a change in ownership or interest in
the insured property, such as a ship.