In what circumstance is 'assignment' typically used in insurance?

In the context of insurance, 'assignment' refers to the process in which the insured party transfers their rights and obligations under an insurance policy to another individual or entity. This is often relevant in situations where the original policyholder sells their interest in the insured asset, such as a business or property, to a new party.

For instance, if a homeowner sells their house, they might assign the homeowner's insurance policy to the buyer, allowing the new owner to benefit from the coverage already in place, thus ensuring continuity in protection without the need to obtain a new policy immediately. This transfer of rights may be subject to approval by the insurance company, depending on the terms of the policy.

In contrast to other options, the process related to assigning rights is specifically focused on the transfer of the policy itself rather than merely administrative changes or claims filing. Thus, it is distinct from situations like transferring insurance to a new vehicle or altering the terms of coverage, which do not involve the formal assignment of rights to another party.