Overview

The Third Parties (Rights against Insurers) Act 2010 clarifies and strengthens the rights of individuals and businesses (third parties) to claim directly from an insurer when the person originally liable (the insured) is insolvent or otherwise unable to pay.

Description

This Act allows third parties who have suffered loss or injury caused by an insured person to claim directly from that person's insurer, even if the insured's liability hasn't yet been fully established in court. The act covers various situations of insolvency, including bankruptcy, administration, and winding-up orders, for both individuals and companies. It applies across England, Wales, Scotland, and Northern Ireland, with some minor variations in legal terminology.

Key Aspects:

• Direct claims against insurers: Third parties can sue insurers directly without first needing to win a case against the insured person.
• Insolvency situations: The act defines various situations where the insured is considered insolvent, triggering the right of the third party to claim from the insurer.
• Liability establishment: While a court judgment against the insured isn't always required before claiming against the insurer, the third party still has to prove the insured's liability for the loss.
• Information disclosure: The Act sets out provisions for obtaining information from the insured and others to support a claim against the insurer.
• Limitations: The act addresses time limits for bringing claims and the insurer's ability to use those time limits as defenses. The act also includes provisions governing the insurer's right of set-off.
• Jurisdiction: The act specifies where a third party can bring a legal action against an insurer, even if the insurer and the third party reside in different parts of the UK.

Government Spending

The Act doesn't directly involve government spending. Its impact is primarily on the insurance industry and how they handle claims involving insolvent parties.

Groups Affected

The Act significantly impacts several groups:

• Third parties: They gain a more direct and efficient method of recovering losses from insurance companies when the person at fault is insolvent.
• Insurers: Insurers face a potential increase in direct claims and may need to adjust their processes and practices to manage these claims.
• Insured individuals and businesses: While not directly affected by needing to pay claims, they should be aware their insolvency will result in claims being made directly against the insurer.
• Legal professionals: The Act creates new areas of legal practice related to claims under this legislation.

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