Third Party Rights - Legal Expenses Insurance

(Tarbuck v Avon Insurance, forthcoming in [2001] Lloyd’s Rep IR)

The Third Parties (Rights against Insurers) Act 1930 confers upon a person who has suffered loss at the hands of the assured a right to proceed directly against the assured’s liability insurers where there has been a judgment against the assured in the victim’s favour. Under section 1(1) of the 1930 Act, the direct action arises “Where, under any contract of insurance, a person … is insured against liabilities to third parties which he may incur …Z” It has generally been assumed that the Act applies only to liability insurance. However, in Tarbuck v Avon Insurance , a decision of Toulson J in November 2000, forthcoming in [2001] Lloyd’s Rep IR, there was an attempt – albeit unsuccessful – to extend the Act to legal expenses insurance and by implication other forms of first party insurance. Insurance Law Monthly is very grateful to Nick Stanbury who provided a copy of the transcript and whose own writings were highly influential to the outcome of this case.