Maryland Supreme Court Blocks Travelers from Rejecting Post-Loss Claim Transfer

BALTIMORE, Md. — July 29, 2025 — In a landmark ruling, Maryland’s Supreme Court has invalidated a common insurance industry practice, ruling that Travelers Home and Marine Insurance Company cannot use anti-assignment clauses to reject post-loss claim transfers. The decision, issued on July 24, 2025, in In the Matter of the Petition of Featherfall Restoration, LLC, strengthens the rights of policyholders to assign claims to third parties, such as contractors, after a loss has occurred, despite restrictive policy language.

The case originated from a 2019 storm that damaged a Maryland homeowner’s roof. After Travelers denied the claim, the homeowners transferred their claim rights to Featherfall Restoration, LLC, a contractor present during the 2020 inspection. Travelers rejected the assignment, citing an anti-assignment clause in the policy, and the Maryland Insurance Administration (MIA) initially upheld this decision. Lower courts affirmed the MIA’s ruling, but the Supreme Court reversed, clarifying that post-loss claim assignments are valid.

Justice Steven Gould, writing for the court, distinguished between assigning an insurance policy and assigning a post-loss claim. “A claim is a chose in action—a property right that can be transferred,” Gould stated. “The anti-assignment clause applies to the policy itself, not to a specific claim filed after a loss.” The ruling emphasizes that once a loss occurs, a claim becomes a distinct asset that policyholders can assign without insurer consent, challenging insurers’ reliance on anti-assignment clauses to limit third-party involvement.

The decision has significant implications for Maryland’s property and casualty insurance sector. Insurers may need to revise policy language and claims handling protocols, particularly as the ruling could influence similar cases in other states. The court remanded the case to the MIA to determine whether Travelers violated state law by refusing to engage with Featherfall as the assignee.

“This ruling is a win for homeowners and contractors,” said a spokesperson for Featherfall. “It ensures that policyholders can work with trusted professionals to resolve claims without unnecessary barriers.” Travelers has not yet commented on the ruling or indicated whether it will adjust its practices.

For more details, visit the Maryland Courts website or review the full decision at www.courts.state.md.us.

Sources: Insurance Business America, Maryland Courts