Third Parties (Rights against Insurers) Act 2010

14 Effect of transfer on insured's liability U.K.

(1) Where rights in respect of an insured's liability to a third party are transferred under section 1, the third party may enforce that liability against the insured only to the extent (if any) that it exceeds the amount recoverable from the insurer by virtue of the transfer.

(2) Subsection (3) applies if a transfer of rights under section 1 occurs because the insured person is a relevant person by virtue of—

(a) section 4(1)(a) or (e), (2)(b) or (3)(b) or (c),

(b) section [F1 6(1)], (2)(a), (3)(c) or (4)(a), or

(c) section 7(1)(b).

(3) If the liability is subject to the arrangement, trust deed or compromise by virtue of which the insured is a relevant person, the liability is to be treated as subject to that arrangement, trust deed or compromise only to the extent that the liability exceeds the amount recoverable from the insurer by virtue of the transfer.

F2 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) For the purposes of this section the amount recoverable from the insurer does not include any amount that the third party is unable to recover as a result of—

(a) a shortage of assets on the insurer's part, in a case where the insurer is a relevant person, or

(b) a limit set by the contract of insurance on the fund available to meet claims in respect of a particular description of liability of the insured.

(7) Where a third party is eligible to make a claim in respect of the insurer's liability under or by virtue of rules made under Part 15 of the Financial Services and Markets Act 2000 (the Financial Services Compensation Scheme)—

(a) subsection (6)(a) applies only if the third party has made such a claim, and

(b) the third party is to be treated as being able to recover from the insurer any amount paid to, or due to, the third party as a result of the claim.

Textual Amendments

F1 Word in s. 14(2)(b) substituted (1.8.2016 immediately after 2010 c. 10 and 2015 c. 4, s. 20, Sch. 2 come into force by virtue of S.I. 2016/550) by The Third Parties (Rights against Insurers) Regulations 2016 (S.I. 2016/570), regs. 1(1), 7(2)

F2 S. 14(4)(5) omitted (30.11.2016) by virtue of The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 35(6)

Commencement Information

I1 S. 14 in force at 1.8.2016 by S.I. 2016/550, art. 2