Under what circumstance can the insured's rights and duties under a policy be transferred?

The correct choice emphasizes that the insured's rights and duties under a policy can be transferred at the death of the first named insured. In many insurance policies, particularly in commercial and personal lines, the death of the named insured can trigger a transfer of rights and duties to the surviving heirs or beneficiaries as outlined in the policy. This is designed to ensure that the insurance coverage continues for the estate and the individuals entitled to benefit from it.

When the named insured passes away, the policy does not immediately become void; rather, it allows for continuity. The heirs or the legal representatives of the deceased may step into the role of the insured to ensure that claims can still be made and that the interests of those affected by the insured's death are protected.

This option aligns with the principle of ensuring that coverage remains available to those who were operating in connection with the deceased, enabling the intended protection to carry on even in the unfortunate event of death. The other circumstances mentioned in the other choices do not generally reflect the standard policy conditions regarding the transfer of rights and duties.