Help, my house is falling down but my builder has gone insolvent!?
One of the upsides to a professional negligence claim is that professionals ought to have professional indemnity insurance. As a result, any claim against a professional is usually covered by an insurance policy and if successful, then you will likely receive compensation from the insurer.
However, what if the professional then goes insolvent, leaving you having to join a long list of creditors?
Whilst there has been the right to claim directly against the insurer under the Third Party (Rights Against Insurers) Act 1930, these rights have been limited in the sense that you would first have to prove liability on behalf of the professional (i.e. by obtaining a judgment against them). This process could prove costly as depending on the circumstances you may first have to restore a dissolved insured to the Company Register, then issue and win a claim against the professional, and then finally issue a claim against the insurer.
However this is now due to change. The Third Party (Rights Against Insurers) Act 2010 is due to come into effect with the implementation of the Insurance Act 2015. Under this Act, if you can directly claim against the insurer rather than having to first claim against the professional. The liability of the professional will be resolved during these proceedings, negating the need for two separate proceedings.
Other significant changes include:
• It will now cover professionals who are subject to an administration order or a debt relief order, partnerships, companies subject to a Companies Act Scheme and struck-off companies not restored to the Register; and
• The insurer will no longer be able to defend any claim on the basis that the professional negated the insurance by failing to notify the insurer of the claim.
So, soon there will be no need to worry if your builder goes insolvent after your house falls down, so long as they are in possession of professional indemnity insurance.
If you want to discuss any potential claims against a professional, give our specialist professional negligence team a call on 0113 244 9931.