Assignment of benefits is a very important subject, and one that is outlined in this paragraph. AOBs involve the assignment of contract rights, and the law has typically held that such rights are assignable, except:
- where prohibited by contract or by law
- when the contract involves a matter of confidence or personal trust
There is also an important distinction between the pre-loss or post-loss assignment of benefits. The law strictly prohibits attempted pre-loss assignment of benefits, since such assignment would necessarily increase risk to the insurer. The assignment of post-loss benefits, on the other hand, do not meaningfully increase insurer risk, and are therefore permitted.