Legislation from 1930 has been overhauled to run far better for claimants whose opponents are insolvent. Third parties have been able to make claims on insurance policies held by insolvent companies or individuals, even when the policy holder has gone away, but the 2010 incarnation of the Third Parties (Rights Against Insurers) Act adds significantly to the ease of claim.
The 1930 Act has been used in many ways over the years such as claims for personal injuries against negligent drivers and employers, claims on computer warranties and claims for professional negligence, all where the defendant is bankrupt or the business has failed. Crucially, the legislation ring-fences the insurance asset for the benefit of the injured party over general creditors. Claims have been pursued with the intention of triggering insurance policies that cover the damage incurred, in some cases even where that damage took place some years earlier.
Technical difficulties often arose though, for example the claim had to be made first against the defunct insured entity to establish liability, leaving a separate claim to be made against the insurer. Now with the advent of the new Act that is no longer necessary and claims can be made directly against the insurer. Taken hand in hand with a new right to obtain details of insurance cover from third parties, such as brokers, the new regime opens up greater possibilities to access insurance. A claimant can now know far more easily, before starting the claim, whether insurance is available and thus whether to take the claim forward.
Notification of claims within relevant time limits remains a relevant consideration but even if the policyholder has failed to notify a claim, the third party’s notification, if made in time, will stand.
The new Act is not a magic bullet though, since claims will still need to be properly established against the insured and will only be indemnified if they fall within the terms of a valid insurance policy.
Nonetheless, the 2010 Act should come into effect shortly and all potential claimants should be aware of the possibilities of claiming against insurance policies indemnifying their loss, even if the policyholder is no longer around.
For more information contact
Susan Hopcraft.
