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What general rules, requirements and procedures govern the filing of insurance claims?

The (re)insurance contract usually specifies the procedure for making a claim under the policy. Most contracts contain notification clauses which set out the time frame for and mechanics of notification. Some notification clauses have the status of conditions precedent to liability, meaning that the insurer is not liable to pay the claim if the insured fails to comply with the stated requirements.

If the insurer declines the claim, the insured may commence court or arbitration proceedings – depending on the dispute resolution process identified in the contract. The English courts have rules and requirements for the management of claims, as set out in the Civil Procedure Rules.

Disputes relating to claims by consumers or micro-enterprises may be referred to the Financial Ombudsman Service for resolution. 

Time bar

What is the time bar for filing claims?

(Re)insurance contracts typically include a notification clause requiring the (re)insured to give the (re)insurer notice of claims or losses or of circumstances which may give rise to a claim or loss, in a particular manner (usually in writing) and within a particular period (eg, as soon as reasonably practicable). A (re)insured may lose the right to an indemnity for failure to comply with a notification clause where compliance is a condition precedent to the bringing of a claim. 

In order to bring a claim in the courts, an insured must be within the limitation period under the Limitation Act 1980 for causes of action founded on breach of contract (ie, six years from the date on which the cause of action accrues). 

Denial of claim

On what grounds can the (re)insurer deny coverage?

A (re)insurer may deny coverage on the following grounds, among others:

  • the policy was not in force when the event giving rise to a claim took place;
  • the loss was suffered during a period not covered by the policy;
  • the type of loss suffered is not covered or is excluded under the terms of the policy;
  • the (re)insured failed to pay the premium, where payment of the premium is a condition precedent to the validity of the policy or right to make a claim;
  • before the inception of the contract, the (re)insured failed to disclose to the (re)insurer all material circumstances which it knew or ought to know;
  • the (re)insured breached one or more terms of the policy;
  • the (re)insured acted fraudulently in the presentation of its claim; and
  • the claim is time-barred.

What rules and procedures govern the insured’s challenge of the denial of a claim?

If the insurer denies a claim, the insured can commence court or arbitral proceedings, depending on the terms of any dispute resolution clause in the policy. The English courts have rules and procedures for the management of litigation, as set out in the Civil Procedure Rules. Many arbitration institutes have their own procedural rules and, if the arbitration is ad hoc, the tribunal will set down directions for the management of the case. 

Third-party actions

On what grounds can a third party file a claim directly with the (re)insurer?

In certain circumstances third parties have direct rights of action under the Contracts (Rights of Third Parties) Act 1999. Under this act a third party can recover under a contract where the contract either expressly enables it to do so or purports to confer a benefit on it. However, many insurance contracts exclude the operation of the act.

If an insured is insolvent – provided that it satisfies the statutory criteria – a third party can make a claim against the insured’s liability insurers under the Third Parties (Rights Against Insurers) Act 1930. A replacement piece of legislation, the Third Parties (Rights Against Insurers) Act 2010, came into force in October 2015.

Finally, an insured may assign its rights under an insurance contract to a third party.

Punitive damages

Are punitive damages insurable?

Cases of punitive damages are relatively rare under English law, but such damages are insurable and may be reinsured.

As a matter of public policy the courts will not enforce a contract of any kind if it is tainted by illegality. Therefore, an insured cannot recover his liability for punitive damages under a policy where the liability arises as a result of illegal conduct.


What regime governs (re)insurers’ subrogation rights?

(Re)insurers’ subrogation rights are covered by the English common law doctrine of subrogation, which is codified by Section 79 of the Marine Insurance Act. 

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