Insurers have been accused of engineering problems to avoid paying the cost of after the event (ATE) insurance policies after another case has had to be referred to the courts for resolution.
Highway Insurance is refusing to pay the costs of the insurance policy taken out by solicitors Amelans with Temple Legal Protection for its client, Karen Tilby.
Highway's client Perfect Pizza was involved in an accident where Tilby was injured.
Highway says as the cost of the policy is only payable at the end of the case, then the policy is in fact credit and should be subject to the terms of the Consumer Credit Act.
The case has been referred to a costs master to resolve and will be heard today (8 November).
Chris Wait, underwriting director at Temple Legal Protection, which was involved in Callery v Gray, said: "Insurers are trying to use every trick in the book - they are abusing the system."
Wait said interested parties in the insurance industry had had plenty of scope to thrash out ATE insurance issues in Callery v Gray. He accused insurance companies of deliberately dragging ATE issues through the courts to cause uncertainty.
"It's disgraceful," Wait said.
Amelans partner Andrew Twambley said if the decision went against Amelans, it would put many ATE insurers at risk. He said the decision in the Tilby case would affect 99% of cases where a personal injury claim was pursued through a solicitor.
"Your average punter can't afford to pay up front."
Wait regretted the need for the courts to have to become involved every time. He said: "The insurance market ought to be big enough and grown up enough to discuss the matters among ourselves."
Highway Insurance was unable to comment on the case.