The Research on the Protection of Victims and Insured under Liability Insurance－Focusing on Third Party’s Direct Action and Insurer Participation

Liability Insurance was originally designed to protect “the insured” from the risks of liabilities imposed by other claims, but with the economic development and began gradually to adopt the doctrine of strict liability in tort, more and more people realize that “the victim” get compensation from insurance payment is more important than before. Thus, modern liability insurance not only for making up “the insured” financial loss, but ensures the victim to get enough compensation. Nevertheless, the fundamental purpose of commercial liability insurance is different from mandatory liability insurance which may impact on the protection of victims and the insured under liability insurance. In order to discuss the issue in respect of “the protection of victims and the insured under liability insurance”, this thesis decide to focus on third party’s direct action and insurer’s participation, and refer to foreign laws, legal theories and case studies to find flexible ways to improve our domestic liability insurance system. The third party’s direct action represents a breakthrough in the exceptional principle of separation which is under the principle of relativity of contracts. However, liability insurance is also called indemnity insurance；The third party (the victim) established the insured’s liability before it could pursue its claim directly against the insurer is necessary. On the contrary, in order to reinforce the protection of victims under the mandatory liability insurance, victims need not to establish the insured''s liability in the beginning. Moreover, how to deal with the insurer’s defense (including the Statute of limitations) based on insurance policy is a problem. In other words, when the insured is liable for the third party, the insurer has to provide indemnity to the insured. That is, the insurance companies need to participate and be involved in the process of the third party’s claims. However, the participation of the insurer is not only a right but also a duty. In order to balance the interests between the insurer and the insured, it is necessary to establish the standard of the insurer''s participation, and the insurer also has a duty to agree that the insured had reached a reasonable settlement.