Limitation periods and third party claims

The Third Parties (Rights against Insurers) Act 1930 confers upon the victim of a negligent assured the right, having established the assured’s liability, to enforce the judgment against the insured’s liability insurers in the event of the assured’s insolvency. This well-meaning piece of legislation has over the years been bedevilled by procedural difficulties. In recent months the courts have gone some way to removing these and to restoring the Act to a workable form. The recent decision of the Court of Appeal in Financial Services Compensation Scheme Ltd v Larnell [2005] EWCA Civ 1408 (forthcoming in [2006] Lloyd’s Rep IR) lends further support to the legislation, holding that the third party is entitled in his claim against the assured to the benefit of the insolvency rule that limitation periods which are unexpired at the date of the insolvency cease to run from that point onwards.