• Federal Court In Virginia Holds Failure To Procure Claim May Be Assigned To Insurer
  • May 28, 2013 | Author: George B. Hall
  • Law Firm: Phelps Dunbar LLP - New Orleans Office
  • A federal court in Virginia recently held that an insured may assign its claim for failure to procure to an insurer because such a claim is not so “personal” so as to be unassignable.  Cincinnati Ins. Co. v. Ruch, 2013 WL 1683669 (E.D. Va. April 17, 2013).

    The insured’s mortgagor was required by its deed of trust to maintain property insurance.  The mortgagor allegedly instructed its agent to procure such insurance, but the agent failed to do so prior to a fire destroying the property.  The insurer paid its insured, the mortgagee, for its losses and became subrogated to the extent of its payment.  The insurer then sued the mortgagor for failing to maintain property insurance in accordance with the deed of trust.  The insurer eventually settled with the mortgagor, agreeing to an assignment of the mortgagor’s right to bring an action for failure to procure against its insurance agent.  As assignee, the insurer then sued the agent for failure to procure.

    The agent moved to dismiss the insurer’s claim, arguing that the assignment of the failure to procure claim was invalid because it is a “personal” action under Virginia law that cannot be assigned.  The court noted that under Virginia law, claims involving contract or property damage are generally assignable, while claims involving personal injury are not.  However, the court was satisfied that the failure to procure claim sounded in property damage (destruction of property) and breach of contract (breach of the alleged oral agreement between the mortgagor and insurance agent) and that the claim could be assigned.