Novation

The process by which a property and casualty insurance company, with full disclosure by the transferee, accepts a new client in place of the original policyholder is not an assignment. It must be an amendment to, or rewrite of, the original policy. This is the case because in contract law a significant modification to an ongoing agreement. Novation is essentially a new contract, although it will usually be with the original parties and on the same subject matter. Novation, in certain instances, completely releases parties from their obligations under and existing contract.