Friday, December 07, 2007

query: what does successors and assigns mean on an insurance policy

Successors and assigns is for legal entities what heirs and assigns is for human beings.

These phrases follow the name of a person or an entity in a legally binding document so that the rights or obligations will survive the death or demise of the person or entity.

For instance, when you purchase real estate your deed will show that the property was conveyed to YOU, your heirs and assigns. This means that the ownership would survive your death by flowing to your heirs and also that you can assign or sell your ownership to another person.

The insurance policy has a mortgagee clause in which the mortgage lender is identified in case of loss. If the house burns down, the mortgage lender wants the insurance company to work through them to protect their collateral.

Let's say your mortgage lender is a bank and that bank is merged into another bank, the new bank would be a successor.

Let's say your mortgage lender sells your mortgage to another bank, in that case, the new bank would be an assign.

Does that make sense?

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