Third Party (Rights Against Insurers) Act 2010: 2026 Update

The 2010 Act’s purpose was intended to streamline the process for claimants to bring claims against the insurers of those who have caused them a loss, addressing some issues with the preceding 1930 Act. It has largely achieved that, however as with any legislative change, the ‘devil is in the detail’. 

Since coming into force, the Act has ‘bedded in’ reasonably well, with some uncertainties ironed out by early decisions, and it is clear how it works – in most cases. However, there remain some question marks on certain points.  

Insolvencies have increased over recent years, not least in the wake of Covid-19 and various global events and ensuing market uncertainty. If most economic and political commentators are believed, this seems set to continue. It follows that more 2010 Act claims can be expected.

Recent decisions have provided clarity on certain issues in 2010 Act claims but, equally, some important questions remain at least arguably large. For insurers there are potentially major implications, in terms of both defending 2010 Act claims, and attempting recoveries following paying out on claims. 

We will be watching these matters carefully over 2026 and suggest Insurers do likewise. We outline some key issues:

Costs – caught by the limit of indemnity?

Indemnity under a liability policy will be limited to a certain amount, whether per-claim or in the aggregate. The limit will usually apply to both damages/settlement and opponent’s costs, and sometimes also defence costs.

It might be assumed that an insurer’s exposure under a policy is limited to the specified sum, even in a 2010 Act claim. There is a strong prima facie logic to that: the starting point is that the 2010 Act gives the claimant whatever rights the insured had under the policy but does not enhance them and so the limit of indemnity remains unchanged. However, in some cases an insurer’s total exposure may, at least, arguably exceed the limit of indemnity. The most obvious way is via costs.

Even if the policy limit takes into account defence costs, it will not necessarily apply to them in a 2010 Act claim – because the insurer is paying to defend itself in such a claim, rather than indemnifying costs incurred in defending its insured. In some cases an insurer may end up paying out the limit of indemnity plus its own defence costs.

There is then the question of any costs awarded to the claimant.  In certain cases, there may be some scope to argue that the limit of indemnity does not apply to these either.

When awarding the costs of a claim, the court is exercising its powers in the context of that litigation and the parties to it. In a 2010 Act claim the defendant will be the insurer itself. It could be argued that the insurer’s liability for any adverse costs is a direct one rather than it arising under its obligation to indemnify the insured (in most cases the insured will not be a party, and there will be no costs order against it). If that situation arises, it could be argued that the limit of indemnity is of no relevance to claimant’s costs awarded against an insurer defendant, such that the total of damages and claimant’s costs can exceed the limit. There are also arguments to the contrary, and no direct authority on the point. The facts of the given case will also matter.

Insurers should be alive to this for example when considering reserves. Specialist and case-specific advice may be warranted in matters with potential to reach the limit of indemnity. 

Limitation – does the insured’s insolvency pause the clock?

Limitation is a perennial area for dispute in claims generally and there are some additional factors specific to 2010 Act claims.  

One question is whether the insolvency of the insured suspends limitation. In some cases, this will of course make a very important difference between a claim being well out of time, versus not yet being, and perhaps not becoming so for years (if ever).

In a non-2010 Act claim against an insured itself, the position is clear:

• In the case of an administration: time continues to run. 
• In a liquidation, the limitation clock is paused (FSCS v Larnell (2005)).

The position in a claim against insurers under the 1930 Act was established to be the same: 

• Administration: time continues to run.
• Liquidation: the limitation clock was paused (FSCS v Larnell (2005)).

But what is the position under the 2010 Act?

• Administration: still the same - time continues to run.
• Liquidation: there is no definitive authority on this – but strong argument that, unlike under the 1930 Act, time continues to run.

That was the conclusion in the County Court matter of Siddique & Ors v HDI [unreported] and was upheld on appeal (a second appeal then went up to the Court of Appeal in 2024, but was withdrawn part-heard).

The court’s comments in the recent matter of Transworld [2025] EWHC 2480), though obiter, offers some further support for the conclusion that the liquidation of the insured does not pause limitation in a 2010 Act claim.  

There is a compelling logic to this conclusion: under the 1930 Act, the insured had to be involved: the claimant had to establish the insured’s liability before it could sue the insurer.  At the same time, an insolvent company generally cannot be sued (unless the court grants permission). It would arguably have been unfair if the time to sue the insured were running down whilst there was a bar on actually doing so.

Under the 2010 Act, however, the claimant can sue the insurer directly and immediately. As such the insolvency very arguably has no bearing on a 2010 Act claim, as it falls entirely outside the insolvency. Further, there is no bar to a claimant bringing a 2010 Act claim against the insurer (and no need to apply for permission) – so it does not need time to be extended.  

So, there is very clear logic, and persuasive authorities, that in a 2010 Act claim the insured’s liquidation does not pause limitation. However, there remains no binding authority on the issue, and it may well yet find its way back to the appeal courts sooner or later, in a claim where enough is at stake and the parties have the appetite to take it all the way.

Seeking recovery after paying out under a 2010 Act claim

If an insured is sued and its insurer pays out, the insurer can ‘step into the insured’s shoes’ to pursue any recovery targets: the well-established principle of subrogation. Again though, the 2010 Act brings some issues all of its own.

An insurer controls a subrogated claim, but must bring it in the name of its insured rather than its own. That distinction may seem a dry formality that has no real consequence and in many cases that will be so. However, in some 2010 Act cases it may present genuine hurdles or pitfalls for an insurer seeking to claw back its outlay.

If dissolved, the insured must be restored in order to bring a subrogated claim – beware the deadline

The 1930 Act required a claimant to have a dissolved insured restored to the register (so that it could be sued, and its liability established). That was seen as an obstacle to justice, and so the 2010 Act allows a claim to be brought against an insurer even if the insured is dissolved, with no need to restore it.  

But what if the insurer in such a case, having paid out, wishes to pursue a third party? In that scenario, it still faces the hurdle that for claimants was removed by the 2010 Act: the insurer must apply to the court to have the insured company restored to the register. Until the insured is so conjured back into existence, the insurer cannot bring a subrogated claim (there are no shoes into which it can step).

Surmounting that hurdle will entail unwelcome time and costs, but in most cases, it can be done. The court will make the restoration order, and the subrogated claim can go ahead.  But the Companies Act 2006 sets a deadline for restoration (generally six years from dissolution). If that has passed, the insurer will not be able to restore the company, so will be unable to bring a subrogated claim.

That was not an intended consequence of the 2010 Act – which was certainly meant to make it easier for claimants to sue insurers, but not to hamper insurers’ ability to then pursue recoveries as appropriate.

In 2018 this lacuna was partially rectified. The “2018 Regulations”  removed the time limit for restoring a company to the register but, oddly, only in the case of personal injury claims.  

As such, in a non-injury 2010 Act case it remains possible that an insurer will have to pay out, but then have no way to purse a subrogated recovery, because its insured is dissolved and it is too late to restore it (imagine say a 2010 Act claim based on the Defective Premises Act 1972, with a 30-year limitation period thanks to the Building Safety Act 2022).

It is possible that further regulations might eventually remove the time limit for restoration in non-injury cases, but there is no indication of that happening any time soon if at all.  

As things stand, therefore, any insurer facing a non-injury 2010 Act claim relating to a dissolved insured should pay serious attention to the key dates and consider whether it might be prudent to seek restoration.   

That should be considered at the earliest stage – waiting to see how the claim against the insurer pans out might mean missing the restoration deadline, preventing any subrogated recovery claim.

Contribution Act claims – barred, as not the ‘same damage’?

A related issue arises when an insurer’s intended vehicle for a recovery claim is the Civil Liability (Contribution) Act 1978 (“1978 Act”). This was brought into stark focus in the recent case of Riedweg v HCC Internal Insurance Plc & others [2024] which we have commented on previously. 

Riedweg involved a 2010 Act claim against an insurer, in which that insurer sought to use the 1978 Act to bring in a third party who it argued had also contributed to the claimant’s loss.

The court held that the insurer could not do so. The rationale is perhaps counter-intuitive, so merits examination.

A fundamental prerequisite of a 1978 Act claim is that both parties must have caused the ‘original’ claimant the ‘same damage’. What is and is not the ‘same damage’ is already a fertile ground for dispute and this decision reveals a new factor specific to 2010 Act claims.  

Despite the 2010 Act in effect making the insurer directly liable to the claimant, the court held that this does not mean that the insurer and the third party caused the same damage. It reached that conclusion by distinguishing between a) the insured’s liability to the original claimant, and b) the insurer’s liability to provide an indemnity in respect of that.  

Though the third party and the insured were both liable to the claimant for the same damage, the court held that the insurer was not. In essence, this was on the basis that the insurer’s liability does not arise directly from any damage caused to the claimant (by its insured), but rather is one step removed: the insurer’s liability arises from its contractual obligation to provide an indemnity against the insured’s underlying liability. The court held that the insurer had not directly caused the same (or any) damage to the claimant as had been caused by the third party, so could not use the 1978 Act to pursue it for a contribution.

This may seem a quite esoteric distinction – and indeed in many cases it will not be any bar to an insurer using the 1978 Act for a recovery. Often it will be able to simply bring the claim as a subrogated one in the name of the insured (which did cause the same damage as the third party) rather than in its own.  

But in certain circumstances that may be harder, or even impossible. For example, if the insured has been dissolved, the insurer will be put to the delay and cost of having it restored.  In some cases though the deadline to restore may have passed, as noted above.  

There may also be issues of ‘sequencing’. An insurer’s right to bring a subrogated claim arises only if, and when, it has indemnified. In some cases – and as in Riedweg – the insurer may have good reason to want to bring its 1978 Act claim before it has indemnified (and indeed may be actively arguing that it has no obligation to indemnify). In certain cases, this issue may make it more onerous for insurers to use the 1978 Act for a recovery claim – or even prevent that entirely.  

This seems to be another unintended side-effect of the 2010 Act which, again, was not intended to stymy insurers’ ability to pursue recoveries. Given the potential impact in some matters, particularly large multi-party ones, this issue seems likely to come back before the courts sooner or later, whether via appeal in Riedweg itself (TBC), or in due course when some other insurer’s recovery prospects may turn on it.

Concluding remarks 

The current economic climate and the likely increase in insolvency events as a result seem set to increase the number of 2010 Act claims against insurers. 

In such claims, insurers will generally be able to deploy the defences the insured would have had, plus any coverage-based ones, but should be alert to potential restrictions on these identified, not least the possibility of any limitation defence being challenged on a Larnell basis. Whilst they will have a cogent retort if so (see comments on Siddique and Transworld), claimants might yet fight the point, and it is not definitively settled.

When insurers do pay out on claims they will generally remain able to seek recovery from third parties as appropriate, but should be alert to the potential impediments arising from seemingly unintended consequences of the 2010 Act. Whilst it can be hoped that these points may yet be clarified or resolved via further legislation and or appeal decisions, as things stand insurers may wish to give careful attention to the key issues and dates, and consider early and proactive steps to mitigate any potential obstacles to recovery. Some of these points of law are quite technical, and contested, and specialist advice may be in order.

Weightmans are very active on these matters, continue to have our ‘ear to the ground’, and stand ready to advise on these issues, and challenge them when necessary.