The Financial Services Compensation Scheme (FSCS) has rejected an application for compensation from Geologistics - a policyholder of Independent Insurance - for costs incurred in an employer's liability claim.
As a result the FSCS has appealled against the claim to clarify whether defence costs for holders of compulsory insurance policies should fall under the protection of the Policyholders Protection Act 1975.
Chief Executive Suzanne McCarthy said: "The FSCS' Board were unanimous in their decision to appeal against this judgement. We believe that the Court of Appeal will uphold an appeal.
"It is important for this issue to be clarified as soon as possible. Part of our role is to ensure that the Scheme doesn't make payments that may be unlawful.
"This judgement has the potential to increase the bill to levy payers, not just for claims against Independent Insurance, but possibly for other currently insolvent insurers and any future insolvencies."
