Understanding your insurer’s response to third-party liability claims

In community schemes, incidents occasionally arise where third parties (people outside of the scheme) experience damage or injury linked to the property. Common scenarios include a gate closing on a visitor’s vehicle, a loose object falling onto someone’s car, or someone slipping and getting injured on the premises. When these incidents happen, the affected party may make a claim against the scheme, demanding compensation for their damages or injury.

In such cases, it’s important to understand how your insurance responds to these types of claims and how this affects you as a policyholder.

When a third-party claim Is rejected on your behalf

When an insurer rejects a third party’s claim, it doesn’t mean they’ve denied your insurance claim. Rather, it means the insurer has chosen to defend you by not accepting the third party’s request or demand for compensation. They have reviewed the situation, evaluated the claim made by the third party, and concluded that the third party’s demand is not justified under the terms of your policy.

This is a key distinction to keep in mind:

• The third party’s claim has been rejected, meaning the insurer has determined that the third party’s request doesn’t meet the grounds required for compensation.
• Your insurance claim remains active and valid, and the insurer is handling this on your behalf.

What happens next?

When your insurer rejects a third party’s claim, they typically handle any follow-up communication directly with the third party. In other words, they “take over” the responsibility for defending you in the matter, shielding you from having to manage the situation.

In cases like these, insurers advise that scheme executives, trustees, and managing agents should refrain from any direct communication with the third party. This isn’t just to simplify things — it’s to avoid accidentally affecting the insurer’s defence strategy. Directly engaging with the third party could unintentionally compromise the insurer’s position, which could affect the outcome of the case.

If you or your managing agents receive further correspondence from the third party, it should be forwarded directly to the insurer or to us at Addsure. This keeps communication streamlined and ensures that all responses are handled according to the insurer’s guidance.

Why clear boundaries are important

Maintaining clear boundaries in these situations protects both you as trustee or managing agent and the scheme’s interests. The insurer has both the experience and the authority to handle these claims, so leaving communication and decision-making in their hands is in everyone’s best interest. It allows the insurer to maintain a consistent stance and strengthens their position in defending against the third party’s demands, particularly, further demands.

Have questions?

If you’re ever unsure about how third-party claims work or what’s happening with a particular case, feel free to reach out. At Addsure, we’re here to help guide you through these processes, ensuring that your interests are protected and that you’re fully informed every step of the way.