Insurance & Reinsurance—claims co-operation and control clauses
Produced in partnership with Ed Anderson of Browne Jacobson and Lisa Henty of Browne Jacobson

The following Insurance & Reinsurance practice note produced in partnership with Ed Anderson of Browne Jacobson and Lisa Henty of Browne Jacobson provides comprehensive and up to date legal information covering:

  • Insurance & Reinsurance—claims co-operation and control clauses
  • Introduction to claims co-operation and control clauses
  • Conditions precedent
  • Typical claims co-operation and control clauses
  • Issues with claims co-operation clauses
  • Issues with claims control clauses
  • QC clauses
  • Reinsurance—claims control clause
  • Section 51 Senior Courts Act 1981

Insurance & Reinsurance—claims co-operation and control clauses

Introduction to claims co-operation and control clauses

All liability insurance policies are policies of indemnity, under which an insurer agrees to indemnify a policyholder against liability to a third party. The position used to be that an insured could only claim the indemnity once they themselves had made payment but in Post Office v Norwich Union Fire Insurance Society Ltd, the court confirmed that the right to be indemnified arose once the insured’s liability was ascertained by agreement or judgment.

In addition, under liability policies insurers will also agree to indemnify the insured for all costs incurred in defending third party claims. These will sometimes be subject to a requirement of consent, not to be unreasonably withheld.

If a claim is within a policy limit, other than any excess or deductible, insurers will have all of the financial exposure in respect of the claim itself. Insurers may also have the only expertise necessary to deal with the claim. A clause is therefore necessary to give them the right, but not the duty, to assume conduct of the defence of the claim and control any settlement (a claims control clause). Without that, policyholders would have the right to conduct the defence, subject only to the limitation that any settlement they agreed was reasonable.

In addition to allowing insurers to control the claim, such

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