BAE recently issued a claim against multiple defendants over a property which it argued had been designed and constructed with defects. When the third defendant, Twintec, went into administration, BAE applied to bring Twintec’s insurers, RSA, into the proceedings under the Third Parties (Rights against Insurers) Act 2010.

RSA opposed the application on the basis that the policy did not cover the claim because Twintec was aware of the defects when the policy was taken out. There were also jurisdictional issues to be considered.

The Court held that RSA could be joined to the proceedings because the Act only requires a third party to “claim to have rights” under an insurance policy. RSA was joined as a co-defendant however part of the claim was stayed to allow the jurisdictional issues to be resolved.

Insurers should be mindful that a coverage dispute will not prevent them from being joined to proceedings under the Act as third parties are only required to “claim” to have rights under a policy rather than establish the liability of the insurer.