NEWS

Recoveries against third party insurers direct

Did you know? When an at-fault third party cannot be found or is dead, or a third party company is deregistered, a cause of action exists against the third party insurer direct!

  • Section 51 of the Insurance Contract Act 1984 (Cth)

Section 51 of the Insurance Contracts Act allows a party that has suffered loss due to the action of a third party to proceed with legal action against the third party’s insurer direct, in circumstances where the third party cannot, after “reasonable inquiry”, be found, or where the third party has died.

The extent of the third party insurer’s liability will be contingent on the third party’s insurance policy that was in place.

The “reasonably inquiry” that has to be undertaken will depend on the circumstances of the matter.  For example, “reasonably inquiries” to locate a third party in a small quantum matter will arguably be less onerous than the inquiries required for a larger quantum claim.

  • Section 601AG of the Corporations Act 2001 (Cth)

Section 601AG of the Corporations Act entitles a party that has suffered loss to a cause of action against the third party company’s insurer direct when the company has been deregistered (in other words, it no longer exists). It is important, however, to distinguish between a company that is deregistered and a company that is in liquidation. To proceed with a claim against a company in liquidation, an application to the Court is required.

In a nutshell, section 601AG removes the need for a party to reinstate a deregistered company and allows a cause of action against the deregistered company’s insurer direct.

  • Section 4 of Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW)

Uniquely to New South Wales, section 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) permits recovery against a third party insurer direct, even if a third party is still alive and can be located. To pursue a third party insurer direct in reliance on this Act, the Court’s leave will be required.  Certain criteria will have to be met to obtain the Court leave, including (i) that there is a policy in place between the third party insurer and third party that responds to the insured’s claim, (ii) that the insured has an arguable case, and (iii) that the third party will likely not be able to satisfy a judgment obtained against it.

So remember, just because a third party cannot be found or is dead, or a third party company is deregistered, does not mean you are not entitled to pursue a claim!  As long as the third party or third party company held a policy of liability insurance, there may be a recovery prospect against the third party insurer direct.

About me (Zareen Resan) – I have been an insurance litigation lawyer for over a year in the William Roberts’s NSW team. Beyond work, you can find me at the gym or competing in fitness and CrossFit competitions!

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