What does 'assignment' refer to in insurance policies?

In insurance policies, 'assignment' specifically refers to the transfer of rights or benefits under an insurance policy from one party to another. This means that the original policyholder can assign their interest in the policy to another individual or entity, allowing that party to receive the benefits or coverage that the policy provides.

Understanding the concept of assignment is crucial because it enables policyholders to transfer their insurance benefits in various situations, such as when selling a property or transferring liability coverage. It is an important feature that enhances flexibility in managing insurance policies.

The other options pertain to different aspects of insurance management but do not define 'assignment'. Renewing an insurance policy is a process of extending coverage for another term, establishing coverage limits relates to the maximum amount that can be claimed, and modifying policy terms refers to changes made to the initial agreement of coverage. None of these accurately reflect the concept of assignment in the context of insurance.