Which legal guideline allows a third party to directly enforce an insurance policy?

The Contracts (Rights of Third Parties) Act 1999 is significant in insurance and contract law as it permits third parties to directly enforce contractual terms under certain conditions. This act altered the traditional rule of privity of contract, which typically restricted the ability to enforce a contract to the parties involved in the agreement.

Under this legislation, a third party can enforce a contract if the contract expressly states that they may do so, or if the contract confers a benefit on the third party. In the context of insurance, this means that individuals outside of the insurance agreement, such as beneficiaries of a policyholder, can have the right to claim benefits from the policy directly, thereby increasing protections and rights for third parties affected by insurance contracts.

Other options, while relevant in certain contexts, do not specifically grant the rights to third parties in the same manner. The Consumer Rights Act primarily focuses on consumer protections rather than third-party rights in contracts, the Financial Services and Markets Act concentrates on the regulation of financial services and does not specifically address third-party enforcement, and the Insurance Act governs the conduct of insurers and policyholders rather than third-party claims directly.