The Third Parties (Rights against Insurers) Act 2010

Reviewed by Matthew Bartlett, Director · Last reviewed 2026-07-20

What the Act does

The Third Parties (Rights against Insurers) Act 2010 transfers the rights of an insolvent insured under a liability policy to the third party to whom the insured owed the liability. In plain terms, if a professional firm becomes insolvent and owed money to a claimant, the claimant can pursue the firm's professional indemnity insurer directly rather than joining an insolvent company that cannot pay.

The 2010 Act replaced the 1930 Act of the same name and came fully into force on 1 August 2016. Its main improvement is that the claimant no longer has to establish the insured's liability first and then bring a separate action against the insurer. Under the 2010 Act the claimant can bring a single set of proceedings against the insurer and establish both the liability and the insurer's obligation to meet it.

Why it matters in construction and property claims

Construction and property professionals often work through limited companies, some of which are dissolved or wound up years after a project completes. When a defect emerges after the responsible entity has gone, the 2010 Act is the route by which a claimant reaches the policy. For the profession, it means that a dormant or dissolved company's run-off cover remains live and reachable long after the firm has stopped trading.

Information rights

The Act also gives a claimant, and a person who reasonably believes they have a claim, the right to obtain information about the insurance. A prospective claimant can serve a notice requiring disclosure of whether a policy exists, the identity of the insurer, the policy terms and whether cover is being disputed. This makes it much harder for an insolvent firm's cover to remain hidden.

Practical consequences for firms and insurers

Run-off cover is not merely a formality. It is the asset a claimant will pursue after insolvency, so allowing it to lapse can leave directors and former principals personally exposed.
Policy conditions still apply. The claimant takes the rights subject to the same terms and defences the insurer could raise against the insured, subject to limited protections in the Act.
Notification obligations survive insolvency, so circumstances should be notified while cover is in place.

Defences the insurer keeps

The claimant who inherits the insured's rights takes them warts and all. If the insurer could have declined the claim against the insured for late notification, non-disclosure or breach of a policy condition, it can generally raise the same points against the third party, subject to limited statutory protections. The Act does prevent certain conditions requiring the insured to provide information or assistance from defeating the claim once the insured has been dissolved, but it does not turn a defective claim into a good one. This is why the discipline of notifying circumstances while the firm is solvent and the policy is live protects not only the firm but the future claimant who will one day rely on the cover.

Apex's role

Apex considers the run-off position for architects, engineers and surveyors, particularly on retirement, merger or the closure of a corporate entity, so that the cover a future claimant would reach under the 2010 Act is in place. The sector guides for architects, engineers and surveyors set out the background.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.

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