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NAME REG. NUMBER SIGNATURE

NAKIMBUGWE SHALUWA 21870
ADONG MARTHA DOREEN 23287
NAMUGWERE ANA HOPE 21862
KULABA PHILLIP 21815
BUNYINE RASHIDA 19814
BABIRYE ASHA 23029
TINO COMFORT VANESSA 21472
BULAGE ESTER SERI 22281
EDGAR ODUDI 21413
NAJIB MUSA

An insurance contract contract cannot be assigned, discuss the velocity of this statement?

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In the assessment of the on going statement that an insurance contract can not be assigned is more of
a limitation that aims to maintain the insurer’s ability to asses risk based on his original policy, though
to differ from this on a larger extent there are instances were an insurance contract will be assigned
legally and on a lesser extent instances were an insurance policy will not be assigned in law.
Section 2 of the insurance Act 1defines an insurance contract as a contract under which one
party known as the insurer in an exchange for premium agrees with another party known as the
policy holder to make payments on the occurrence of a specific provided uncertain event which
when occurs will be adverse to the interests of the policy holder or the person who will receive
payment of the benefit.
An assignment in law is the transfer of rights. Therefore in the law of insurance it refers to the transfer of
insurance interests in the policy of insurance or to transfer the benefits accruing to one party to another
one party is called the assignor and the other called the assignee.

The assignor must make some clear statement of intent to assign clearly identified contractual rights to
the assignee
It should be noted that a promise to assign in the future has no legal effect.
A cause of action for breach of the contract on the part of the obligor lies with the assignee which will
hold the exclusive rights to commence a cause of action for any failure to perform or defective
performance because the assignee substitutes the assignor the obligor can raise any defense to the contract
that the obligor could have raised against the assignor. This is due to the rights and liabilities of assignees
as per section 107(3) of the insurance Act 2the transferee under duly registered assignment has all powers
and is subject to all the liabilities of the transferor under the policy and may sue in his own name on the
policy.
Moreover any discharge or surrender of or security over the policy given to the insurer by the transferee is
valid and effectual not withstanding the existence of any trust, rights, equity, or interest of any other
person.
Assignment of the policy
It should be noted that all policies are regarded as personal to the insured and any assignment of them
requires the consent of the insurer therefore for a policy to be assigned the insurer’s consent must be
sought.
If the insurance policy explicitly permits assignment and the insurer agrees to it the policy holder can
assign the contract in the case of Peters Vs General accident fire and life assurance corporation limited
[1938]All ER 267 3the vendor of a motor car insured by the defendant handed over the insurance policy
with the car to the purchaser the policy contained the a clause extending the cover to any person driving
with the consent or permission from the insured later on the court one served that when the vendor sold
the car the insurance policy automatically lapsed and therefore at the time of the accident the purchaser
could not be said to be driving the car by the order or with the permission of the vendor as the car was
then the purchaser’s own property.
It was also noted that property shall not pass until the final payment of the assignment insurance of
interest is done.

Assignment of the benefit

This is typical in life insurance by benefit we mean the benefits payable under the policy the benefits can
be assigned it should be noted the benefit to the policy is a chose in action such a policy allows
assignment to family members a policy holder of life insurance may want to transfer benefits to his
spouse or children under part IX of the insurance Act an assignment of a policy of life insurance must be
by memorandum of transfer endorsed upon the policy or annexed thereto. This memorandum needs to be
1
Section 2 of the insurance act of 2017.
2
Section 107 of the insurance Act 2017.
3
Peters Vs general accident fire and assurance corporation.

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signed by the transferor and attested by a witness and registered with the insurer. And one of the key
regards an insurer carrying out life insurance business is required to maintain a register of assignments
made by the persons it insurers
Assignment of the subject matter of the insurance policy.
The assignment of the subject matter of an insurance policy refers to the transfer of the insured property
or risk to another party.
Generally the assignment of the subject matter of an insurance policy can not operate to assign the
insurance once the contract for the sale of property or land.
As already noted the insurer’s consent is of great essence and the insurance company needs to asses and
approve the new risk the policy holder to us usually required to inform the insurer about the intent to
assign the subject matter of the policy through a notice and the insurer will asses the risk associated with
the assigned subject matter depending on the nature of the premium or the terms of the policy. In the case
of Rayner Vs Presto (1881)18Ch D14 the plaintiffs brought their action to establish their right to a sum
received by the vendors from the insurance office or to have it applied in or towards reinstating the
buildings injured the court below decided against their claim and from this the plaintiffs appealed it was
contended by the appellants that they were in insurance law assignment whether or not a contract is
assignable is a complex issue as earlier noted the information in the proposal is the basis upon which the
insurer issues the policy to the insured and as a matter of fact some insurance policies can not be
assigned.
Assignment by contract and operation of the law
Assignments by are provided for in the allowing a party to assign the policy the terms and conditions in
respect to the assignment are agreed upon by the parties and stated in the contract where a voluntary
assignment is made by the insured then it should be specifically and validly assigned as a policy. In the
case of Lucy Kabege t/a ideal surveyors and real estate management Vs NICO insurance (U) limited 5
the defendant drew a policy in which they incorporated the clause of fidelity the. When it came to the
policy it mentioned libel and slander and loss of documents whose premiums they did not disclose court
found this to be an ambiguity and resolved it in the other party favour and an assignment by operation of
the law a-raises where the law assigns the policy to a third party and in other ways of assignment by
operation of the law assignments can occur under court orders or legal proceedings such as divorce
proceedings administrators and executors of property.
Corporate ownership changes
In commercial insurance when there is change in ownership or control of business insurance policies may
be assigned to the new entity.
It is however important to adhere to three conditions of assignment which are:
1) The assignment of the policy must accompany the assignment of the subject matter.
2) The insured must obtain the consent of the insurer the rationale for the insurer consent is based on
the fact that an assignment of the policy is substantially an adjustment in the nature of the risk
insured against
3) The policy prescribes a particular procedure to be followed in the process then it must be adhered
to.

However Insurance contracts assignments may be restricted due to certain circumstances and
these include the following

4
Rayner Vs presto (1883)18D Ch 1.
5
Lucy kabege t/a ideal surveyors and real estate Vs NICO insurance (u) limited.
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Unilateral policies
Some insurance policies explicitly state that they cannot be assigned such restrictions are always
in place to ensure that the original policy holder maintains a direct interest in the subject matter
an example is life insurance policy that at times limit assignment so as to preserve the concept of
insurance there are also policies that may not be transferred.

Terms of the contract

Assignments are permitted unless there is an express prohibition against the assignment of rights in the
contract an assignment cannot have any effect on the duties of the other party to the contract nor can it
reduce the possibility of the other party receiving full performance of the same quality.
As a general rule the parties to a contract can agree that the rights and obligations under that contract
are not transferrable and that if one party seems to extend or sales the rights to another person the
contract ceases.
Assignment in marine insurance is provided for under section 50 and 51 of the marine insurance Act
that a marine policy is assignable unless it contains terms expressly prohibiting assignment. It may be
assigned either before or after loss. Where a marine policy has been assigned so as to pass the beneficial
interest in such a policy the assignee of the policy is entitled to sue there on in his own name this issue
also is incorporated with consent that we’re parties have not agreed on the assignment such assignment
would be considered not legal and will not be allowed.
Expiry of time
This refers to the end of an insurance coverage period when an insurance cover reaches its end the
coverage ceases and unless it’s renewed the policy won’t be used by the insurer policy holders most times
receive notices before the real time for the expiry of the insurance cover so has to either renew the same
or not and in instances were the policy has expired the Insured will be in no position to assign the same
and where it is discovered that the insured assigned such a cover with notice that it expired would have
done this fraudulently and Incase of any thing will be liable to the assignee.
In conclusion on a larger extent insurance contracts can be assigned as for the giver circumstances
though this has restrictions.

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