Third Parties (Rights against Insurers) Act 2010

Category: Statutes and regulation · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~5 min read

What the Act does

Section 1 sets out the mechanism. It applies where a relevant person incurs a liability against which that person is insured under a contract of insurance, or where a person subject to such a liability becomes a relevant person. On that happening, the rights of the relevant person under the contract against the insurer in respect of that liability are transferred to and vest in the person to whom the liability is or was incurred — the third party. A “relevant person” is a person within sections 4 to 7 of the Act, which set out the insolvency and analogous events for individuals, companies and other bodies.

The Act came into force on 1 August 2016 by the Third Parties (Rights against Insurers) Act 2010 (Commencement) Order 2016, and Schedule 4 repealed the Third Parties (Rights against Insurers) Act 1930 and its Northern Ireland equivalent in their entirety.

The single set of proceedings

The most practically significant change is in section 1(3): the third party may bring proceedings to enforce the transferred rights against the insurer without having established the relevant person’s liability, although it may not enforce those rights without having established that liability. Section 1(4) defines when liability is established — by a declaration under section 2 or a declarator under section 3, by a judgment or decree, by an arbitral award, or by an enforceable agreement.

Section 2 then provides the machinery for England and Wales and Northern Ireland. A claimant who has not yet established the insured’s liability may bring proceedings against the insurer for a declaration as to the insured’s liability to it, a declaration as to the insurer’s potential liability to it, or both. Where the court makes a declaration whose effect is that the insurer is liable, it may give the appropriate judgment against the insurer. The insured may also be made a defendant to those proceedings, and if it is, the declaration binds the insured as well as the insurer.

Under the 1930 Act a claimant generally had to establish the insured’s liability first and, if the insured was a dissolved company, restore it to the register in order to do so. The 2010 Act collapses that into one action.

Defences and conditions

The third party takes the insured’s rights as they stand, not a better set. Section 2(4) provides that in proceedings for a declaration as to the insured’s liability, the insurer may rely on any defence on which the insured could have relied.

Section 9 then modifies the policy conditions that would otherwise defeat the claim. Anything done by the third party which, if done by the insured, would have amounted to or contributed to fulfilment of a condition is treated as if done by the insured. Transferred rights are not subject to a condition requiring the insured to provide information or assistance to the insurer where that condition cannot be fulfilled because the insured is an individual who has died, a body corporate that has been dissolved, or an unincorporated body other than a partnership that has been dissolved — though section 9(4) makes clear this does not extend to a condition requiring notification of the existence of a claim. Section 9(5) disapplies any condition requiring the prior discharge by the insured of its liability to the third party, the so-called pay to be paid clause; section 9(6) preserves such clauses in marine insurance except in respect of death or personal injury.

Where it bites in practice

The Act matters wherever a liability claim outlives the entity that caused it. Long-tail disease and abuse claims against dissolved employers, defect and negligence claims against contractors and consultants that have gone into liquidation, and product claims against companies that have been struck off are the standard examples. It is also why run-off cover and the retention of historic policy documents matter so much: a claimant seeking to use the Act needs to identify the policy, and the Act contains information rights directed at that problem.

For a solvent business the Act is a reminder that its liability policies are, in a real sense, an asset that its claimants can reach if it fails. For a claimant it is the route to a real defendant when the nominal one has none.

Frequently asked questions

Can I sue an insurer directly under the 2010 Act?

You can bring proceedings against the insurer without first having established the insured's liability, and you may seek a declaration as to that liability in the same action. What you cannot do is enforce the transferred rights until the insured's liability has been established.

Does the Act apply if the company was dissolved years ago?

The Act applies where the insured is a relevant person within sections 4 to 7, which include dissolution and other insolvency events, and section 9 removes conditions requiring information or assistance that a dissolved body cannot fulfil. It came into force on 1 August 2016; whether it or the 1930 Act applies to a particular case depends on the transitional provisions.

Can the insurer still rely on policy defences?

Yes. Section 2(4) preserves any defence on which the insured could have relied. The third party stands in the insured's shoes, subject to the specific modifications in section 9.

What is a pay to be paid clause?

A condition requiring the insured to discharge its liability to the third party before the insurer pays. Section 9(5) disapplies it against a third party exercising transferred rights, except in marine insurance where section 9(6) limits that disapplication to death or personal injury.

Related entries

• Insolvency exclusion
• Public liability insurance
• Employers' liability insurance
• Run-off cover
• Directors' and officers' insurance
• Commercial insurance UK

This entry is part of the Apex Insurance Wiki. It states the position as at August 2026. Last reviewed 2026-08-22. Next review: 2027-02-22. It is general insurance information, not legal advice, and it is not regulated advice on a specific policy.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.