Which statement best describes assignment of an insurance policy to a bailee?

Which statement best describes assignment of an insurance policy to a bailee?

• A. An insured cannot assign the policy to a bailee
• B. A bailee can be named as the insured
• C. Bailee is automatically insured for all claims
• D. Assignments are prohibited for liability policies

Answer: (A)

Assignment means transferring the rights under an insurance contract from the insured to another party. A policy is a contract between the insurer and the named insured, so it isn’t normally transferable to a bailee without the insurer’s consent. That’s why the statement that an insured cannot assign the policy to a bailee reflects the typical rule. If a bailee needs coverage while handling someone else’s property, the proper approach is to add the bailee as an insured or additional insured through an endorsement, not to assign the policy itself. The other ideas aren’t accurate: a bailee can be named as insured in some endorsements, a bailee isn’t automatically insured for all claims, and whether an assignment is allowed depends on the policy and consent, not a blanket prohibition for liability policies.

Assignment means transferring the rights under an insurance contract from the insured to another party. A policy is a contract between the insurer and the named insured, so it isn’t normally transferable to a bailee without the insurer’s consent. That’s why the statement that an insured cannot assign the policy to a bailee reflects the typical rule. If a bailee needs coverage while handling someone else’s property, the proper approach is to add the bailee as an insured or additional insured through an endorsement, not to assign the policy itself. The other ideas aren’t accurate: a bailee can be named as insured in some endorsements, a bailee isn’t automatically insured for all claims, and whether an assignment is allowed depends on the policy and consent, not a blanket prohibition for liability policies.