Making an insurance claim against a bankrupt company or person has become easier following a revision of the relevant law. The Third Parties (Rights against Insurers) Act 2010 came into force on 1 August 2016. Now third parties can make claims directly against insurers without having to restore an insolvent company.
Insurers will also have to respond to requests for information about insurance policies taken out by the insolvent business within 28 Days. This will make it much easier for third parties to find out if their claim is covered by insurance.
The new law modernises a 1930s Act, which had been introduced to protect third parties by giving them a direct claim to insurance payments in insolvency cases. It does away with the need to establish the insured’s liability before making a claim against an insurer.
“We could see more negligence claims being made against insurers of liquidated companies as a result of this new law,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “Insurers and brokers will also have to make sure that they have effective procedures in place to be able to react quickly to requests for information about cover, as 28 days only gives them a limited time to react.”