David Hertzell & James Sharpe chart the history & progress of the Third Parties Bill
The Third Parties (Rights against Insurers) Bill was introduced in the House of Lords last month. The Bill follows the widely supported recommendations of the Law Commission and the Scottish Law Commission, published in 2001.
The Bill replaces the Third Parties (Rights against Insurers) Act 1930 (and its Northern Ireland equivalent). The 1930 Acts sought to deal with the problem highlighted in Re Harrington Motor Company [1928] Ch 105. The claimant was injured by a car belonging to an insured company.
He won damages, but the company was wound up before he could enforce the judgment. The court ruled that the insurance proceeds were part of the assets of the company, to be distributed among the creditors, denying the victim his full payment.
The 1930 Acts are not just confined to road traffic cases, but apply generally. When an insured is liable to a third party, eg an employee, and the insured becomes insolvent, the Acts transfer the insured’s rights under the insurance policy to the third party,
