Prudential Regulation Authority Rulebook

9.1

A protected claim is a claim under a protected contract of insurance.

9.2

A protected contract of insurance is:

1. (1) (if issued after 1 December 2001) a contract of insurance within 9.3; or
2. (2) (if issued before 1 December 2001) a contract of insurance within 9.6.

9.3

A contract of insurance issued after 1 December 2001which:

1. (1) relates to a protected risk or commitment as described in 9.4;
2. (2) was issued by a relevant person (whether or not there is now a successor in respect of that relevant person) through an establishment in:
1. (a) the UK; or
2. (b) another EEA State; or
3. (c) the Channel Islands or the Isle of Man;
3. (3) is a contract of long-term insurance or a relevant general insurance contract;
4. (4) is not a reinsurance contract; and
5. (5) if it is a contract of insurance entered into by a member, was entered into on or after 1 January 2004;

is a protected contract of insurance.

9.4

A risk or commitment is a protected risk or commitment for the purpose of 9.3 if:

1. (1) in the case of a contract of insurance falling within 9.3(2)(a), it is situated in an EEA State, the Channel Islands or the Isle of Man;
2. (2) in the case of a contract of insurance where the relevant person is a UK firm issuing a contract of insurance through an establishment falling within 9.3(2)(b), it is situated in an EEA State;
3. (3) in the case of a contract of insurance where the relevant person is a firm which is not a UK firm issuing a contract of insurance through an establishment falling within 9.3(2)(b), it is situated in the UK; or
4. (4) in the case of a contract of insurance falling within 9.3(2)(c), it is situated in the UK, the Channel Islands or the Isle of Man.

9.5

For the purpose of 9.4 and 9.6, the situation of a risk or commitment is determined as follows:

1. (1) for a contract of insurance relating to a building or a building and its contents (in so far as the contents are covered by the same contract of insurance), the risk or commitment is situated where the building is situated;
2. (2) for a contract of insurance relating to vehicles of any type, the risk or commitment is situated where the vehicle is registered;
3. (3) for a contract of insurance lasting four months or less covering travel or holiday risks (whatever the class concerned), the risk or commitment is situated where the policyholder took out the contract of insurance; and
4. (4) in cases not covered by (1) – (3):
1. (a) where the policyholder who first took out the contract of insurance is an individual, the risk or commitment is situated where he has his habitual residence at the date when the contract of insurance commenced;
2. (b) where the policyholder who first took out the contract of insurance is not an individual, the risk or commitment is situated where the establishment to which the risk or commitment relates is situated at the date when the contract of insurance commenced;
3. (c) where the policyholder who first took out the contract of insurance is a trustee the risk or commitment is situated:
1. (i) if the trustee is an individual, where the trustee has his habitual residence at the date when the contract of insurance commenced;
2. (ii) if the trustee is not an individual, where the establishment to which the risk or commitment relates is situated at the date when the contract of insurance commenced; and
4. (d) where there are two or more policyholders, so long as one policyholder’s risk or commitment under (a) – (c) is a protected risk or commitment, that shall be where the risk or commitment is situated.

9.6

1. (1) If after 1 December 2001, a relevant person (or where applicable, a successor) is subject to one or more of the proceedings listed in 10.4 (or 11.4, in the case of a successor) or where a relevant person (or where applicable, a successor) is declared in default, then a contract of insurance issued by a relevant person before 1 December 2001 which is within (2) is a protected contract of insurance, provided that the relevant person (or where applicable, a successor) was not a member at the time the contract of insurance was issued, and:
1. (a) (unless it comes within (b)) at the earlier of the events in (1) it was a "United Kingdom policy" for the purposes of the Policyholders Protection Act 1975; or
2. (b) if the contract of insurance is a contract of employers' liability insurance entered into before 1 January 1972 or (for contracts in Northern Ireland) 29 December 1975, and the claim was agreed after the default of the insurer; the risk or commitment was situated in the UK (as set out in 9.5).
2. (2) The contracts of insurance referred to in (1) are:
1. (a) a relevant general insurance contract;
2. (b) a contract of insurance within the credit class; and
3. (c) a contract of long-term insurance;

which in each case is not a reinsurance contract.

9.7

If it appears to the FSCS that a person is insured under a contract which is not evidenced by a policy, and it is satisfied that if a policy evidencing the contract had been issued, the person in question would have had a protected contract of insurance, the FSCS must treat the contract as a protected contract of insurance.

9.8

The FSCS must treat liabilities of a relevant person (or where applicable, a successor) which is in default, in respect of the following items, as giving rise to claims under a protected contract of insurance:

1. (1) (if the contract is not a reinsurance contract and has not commenced) premiums paid to a relevant person;
2. (2) proceeds of a contract of long-term insurance that is not a reinsurance contract and that has matured or been surrendered which have not yet been passed to the claimant;
3. (3) the unexpired portion of any premium in relation to relevant general insurance contracts which are not reinsurance contracts; or
4. (4) claims by persons entitled to the benefit of a judgement under section 151 of the Road Traffic Act 1988 or Article 98 of the Road Traffic (Northern Ireland) Order 1981.