Q&As

If an escaped 'dangerous dog' causes damage and the dog was insured to provide third party cover for this situation, can the insurance company become liable to pay any unsatisfied judgment against their policyholder?

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Published on LexisPSL on 24/04/2017

The following Insurance & Reinsurance Q&A provides comprehensive and up to date legal information covering:

  • If an escaped 'dangerous dog' causes damage and the dog was insured to provide third party cover for this situation, can the insurance company become liable to pay any unsatisfied judgment against their policyholder?
  • Enforcement of judgment
  • Position where insured party becomes insolvent

At common law, it is not possible for a third party to claim against another party’s insurer, as an insurance contract is between the insurer and the policyholder. Therefore, where a person insured under a liability insurance policy becomes liable for injury or damage sustained by a third party, the third party (not being a party to the contract of insurance) has no right to proceed directly against the insurers.

Historically, this position was the same where the insured party became insolvent, as the policy money became part of his general assets and the injured third party ranked as an ordinary creditor. The hardship caused by in scenario led to the introduction of a limited system of statutory subrogation, where in the event of the insolvency of the insured, the third party was entitled to be paid the policy money (and if necessary, to enforce the policy against the insurers). See General insurance principles for construction projects—overview and Injured party not subrogated at common law: Halsbury's Laws of England [627].

Enforcement of judgment

Where a money judgment against an insurance policyholder remains unsatisfied, the judgment c

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