On July 9, 2026, Governor Mike Kehoe signed law Mo. Statute Section 379.135 which significantly changes the law of Missouri regarding the ability for an insured or claimant to assign rights to a claim or covered loss to a third party. The new statute is effective as of August 28, 2026. That statute specifically provides for all such assignments to be null and void in the context of property damage claims.
In addition, the statute provides that upon payment by an insurer of all or any part of a property damage claim the legal title to the portion of the claim paid by the insurer. In short, the statute gives insurers who pay all or part of a claimant’s property damage claim legal title to the portion of the claim paid. Until now, the insured has retained title to the cause of action, while the insurer’s interest is an equitable right of subrogation. Hagar v. Wright Tire & Appliance, Inc., 33 S.W.3d 605, 610 (Mo. Ct. App. 2000).
Subsection 1 of the statute clarifies Missouri law relating to the ability of an insurer to pursue recovery of any payments made against any other party that may be liable for the property damage paid to an insured. This provides that when an insurer pays all or part of a claimant’s property damage claim, the statute vests legal title to the portion of the claim paid to the insurer, and the claimant retains title only to the unpaid portion of the property damage claim. This is a change in the current law of “subrogation” and transfers that legal title to recovery for these damages that are paid, from the claimant/insured to the insurer that paid the claim.
Subsections 2 and 3 prohibit an insured from assigning or transferring, in whole or in part, the insured’s duties, rights, or benefits under the policy, whether this is attempted before or after the claimed loss and makes contracts where policyholders assign or transfer their rights, duties, or benefits under a policy before or after a claimed loss void and unenforceable. These Sections specifically outlaw third parties such as public adjusters, contractors, estimators, restoration companies or any other third party taking any assignment of the proceeds of an insurance policy for property damage. This statute goes a long way in combatting the industry that has been built around third parties inserting themselves into the claims handling process of property damage claims and convincing insureds to assign their rights for a fee or percentage of any recovery. It goes so far as to provide the issuance of a level two violation of Mo. Rev. statute section 374.049 which calls or a $1,000.00 fine for each violation.
However, the statute specifically provides that this statute does not apply to any covenant not to execute or contract to limit recovery in a liability setting pursuant to Mo. Rev. Statute 537.065.
Section 379.135 is significant because contrary to the rule in Missouri up to this point, it gives insurers legal title in the portion of the claim paid. Subrogation “arises by operation of law (in the casualty insurance context) when the insurance company under its contract obligation pays all or a part of the property damage incurred by its insured.” Farmers Ins. Co., Inc. v. Effertz, 795 S.W.2d 424, 426 (Mo. Ct. App. 1990). When the insurer has the right to subrogation, the insured retains “[t]he legal title to the cause of action” and “[t]he exclusive right to sue for the entire loss….” Id. The only way the insured could have “the exclusive right to maintain the suit against the tort-feasor for the entire claim” was through assignment of the claim. Id. In contrast to this, Section 379.135 vests the legal title to the portion of the claim paid in the insurer and only allows the insured to retain title to the unpaid portion, thereby expanding insurers’ rights regarding suing for the loss. Section 379.135 allows insurers to have less reliance on the insured in property damage claims and gives the insurer more power to enforce their own rights without the insured assigning the claim to the insurer.
Subsection 2 of the statute, concerning assignment or transfer of rights, duties, or benefits under a policy, is also a significant change. Previously, “[g]enerally, an insurance policy [could] not be assigned where an assignment is expressly prohibited by the terms of the insurance policy, unless the insurance company assents to the assignment.” Smith v. R.B. Jones of St. Louis, Inc., 672 S.W.2d 185, 186 (Mo. Ct. App. 1984). However, Missouri courts have also embraced the general rule that “an assignment made by the insured after the event has occurred on which liability under an insurance policy is predicated does not violate a policy provision prohibiting assignment of the policy or its benefits.” Magers v. National Life & Acc. Ins. Co., 329 S.W.2d 752, 756 (Mo. 1959). Therefore, assignment of benefits before the loss has been prohibited without insurer consent, but assignment occurring after the loss has been allowed by Missouri courts. In contrast to this, Section 379.135 prohibits assignment or transfer of the insured’s rights, duties, or benefits before or after a claimed or covered loss.
Read the statute in full here: Missouri Revisor of Statutes – Revised Statutes of Missouri, RSMo Section 379.135