In 2023, the number of bankruptcies in Sweden increased compared to previous years. The bankruptcy of a company does not only have consequences for the company and its employees, but also raises questions for those who in one way or another have a relationship with the bankruptcy debtor. If the bankruptcy debtor has caused damage to someone, the prospects of receiving compensation from the bankruptcy estate are generally low. It is therefore important to keep track of the possibilities for obtaining compensation for your loss. One such possibility is to make a claim directly against the bankrupt debtor’s insurance company.

Inflation and high interest rates have led to a tough business climate in 2023. According to the annual survey by the business and credit company UC, the number of bankruptcies during the year was at the highest level since the financial crisis in the 1990s. The Swedish recession is predicted to last until 2025 and there is uncertainty about when the bankruptcy trend will reverse.

The assets of the bankruptcy estate must be distributed among the creditors

When a company goes bankrupt, its assets must often be distributed among several different creditors. Usually, the assets of the company are not enough to pay all the debts. If you have a claim for damages against a bankrupt company, it can therefore be difficult to get compensation from the bankruptcy estate for the damage.

However, many business insurance policies include liability insurance that can be claimed if the company has caused damage to someone. However, if the insurance compensation is paid to the bankruptcy estate, the compensation may be distributed among several creditors and not only to the person who has been harmed by the company.

Claimants can benefit from the bankruptcy debtor’s liability insurance policy

Normally, only the policyholder can decide whether to use the liability insurance, but once the company has gone bankrupt, the injured party has a right of his own. It is possible for an injured party to make a claim directly against the bankruptcy debtor’s insurance company in order to use its liability insurance.

This means that you can go directly to the bankruptcy debtor’s insurance company and hopefully get the damages paid out that way. One advantage is that the insurance compensation goes directly to the injured party instead of being divided among the creditors of the bankruptcy estate.

As a general rule, the injured party has the same right to insurance compensation as the bankruptcy debtor

The main rule in the case of bankruptcy of the insured is that the injured party should not be in a better or worse position than the insured. This means that the injured party will have the same right to insurance compensation as the contract gives the insured, unless otherwise provided by law or insurance conditions.

Therefore, as a general rule, any legal loss for the insured also affects an injured party making a direct claim. However, exceptions in the insurance terms and conditions and other limitations on insurance compensation, will also apply to the injured party.

Check the terms and conditions of the other party’s liability insurance

It is not uncommon for insurance conditions to require that a claim be reported within a certain period of time. It is therefore important to try to ensure that a notification of the claim to the insurance company is made in due time in order not to lose the right to insurance compensation.

It may therefore be a good idea, when making a claim, to encourage the other party to notify the claim to their insurance company, or to notify the insurance company of the claim as soon as you become aware of the other party’s bankruptcy.

Check and require that your counterparty has a liability insurance

When concluding a contract, it is relevant to check whether counterparties have liability insurance and the conditions for this. This will make it easier to calculate any risks, enable you to act more quickly and hopefully obtain compensation for any damage in the event that the counterparty goes bankrupt.

Liability insurance with the counterparty gives you greater security. In some cases, it may also be appropriate to include a clause in the contract with the counterparty requiring such insurance, for example in the case of large or long-term projects.