Third Parties (Rights Against Insurers) Act 2010

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Third Parties (Rights Against Insurers) Act 2010
  • Delayed implementation of the 2010 Act
  • Position at common law
  • Shortcomings of the 1930 Act
  • Key changes under the 2010 Act
  • Which insolvency situations does it apply to?
  • Establishing liability
  • Effect of the 2010 Act—automatic transfer
  • Defences available to the insurer
  • Anti-avoidance provisions/no contracting out
  • More...

Third Parties (Rights Against Insurers) Act 2010

This Practice Note considers the key provisions of the Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act), which replaced the Third Parties (Rights Against Insurers) Act 1930 (the 1930 Act) from 1 August 2016. The provisions may assist where the insured has become insolvent as it allows a third party which has suffered loss to make a claim against another party’s insurer directly in certain cases (the claimant is called the third party as they are not a party to the insurance contract). This is a huge advantage to the third party who may potentially recover 100% of their claim for the deep pockets of the insurer, rather than having to claim in the insolvency of the insured and rank as an unsecured creditor where they may only recover a fraction of the original claim. In essence, the legislation allows the intended beneficiaries of an insurance policy to benefit from the insurance. It applies to all types of liability insurance (for a summary, see Practice Note: Third Parties (Rights against Insurers) Act 2010—one minute guide).

Delayed implementation of the 2010 Act

The 2010 Act received Royal Assent on 25 March 2010 but its implementation was delayed to make further amendments to the 2010 Act to add:

  1. a number of specific insolvency situations, and

  2. a power for the Secretary

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