In most European Union Member States there is a compulsory requirement for vehicle owners to have third party liability insurance. Following an accident, a Claimant can usually choose whether to pursue a claim against the driver of the other vehicle or to apply direct to the insurer in order to obtain compensation.

The European Communities (Rights against Insurers) Regulations 2002 introduced Article 3 of the Fourth Motor Insurance Directive and sets out the provision for having a direct right of action against insurers.

Regulation 3 – Right of action

1. Paragraph (2) of this Regulation applies where an entitled party has a cause of action against an insured person in tort or (as the case may be) delict, and that cause of action arises out of an accident.

2. Where this paragraph applies, the entitled party may, without prejudice to his right to issue proceedings against the insured person, issue proceedings against the insurer which issued the policy of insurance relating to the insured vehicle, and that insurer shall be directly liable to the entitled party to the extent that he is liable to the insured person.

Essentially, this Regulation provides that a Claimant can recover compensation directly from the insurance company rather than pursuing the policyholder responsible.