Irish motor policyholders left without cover by the collapse of Independent Insurance in June will be protected by the British industry-funded safety net, it emerged yesterday.

After several weeks of deliberating, the British Policyholders Protection Board has reached a decision on the status of some 9,000 Irish private policies, defining them as UK policies.

The board is a statutory body set up under the 1975 Policyholders Protection Act to assist policyholders when an authorised UK insurance company becomes insolvent.

"In the case of policies issued in the Republic of Ireland, the Policyholders Protection Board takes the view that they are eligible for protection subject to other requirements of the 1975 Act", a spokeswoman said. This protection does not extend to corporate policies.

In the case of general insurance business, the board will normally pay 90 per cent of liabilities towards policyholders who are private individuals, rising to to 100 per cent for liabilities subject to compulsory insurance, such as third party motor insurance.

The board has agreed that, where the conditions of a policy require a return of premium to be paid in the event of a cancellation of the insurance, it will pay 90 per cent of the return premium.

Carole Nash Insurance Consultants, which sold motorcycle and classic car insurance policies underwritten by Independent Insurance through its Dublin office, said this was great news for all concerned.

Carole Nash will be speaking to the liquidator of Independent Insurance and the board today to clarify the position for its policyholders. A spokesman for the company said that, if the treatment of the Irish policyholder mirrored that of the UK policyholders, Carole Nash would pay the outstanding 10 per cent on any claims or refunds.

All claims will be processed through Carole Nash and the provisional liquidator before they reach the Policyholders Protection Board. As soon as the board has all the necessary documentation from the provisional liquidators, it expects to be able to dispatch cheques within 10 working days.

Mr Martin Long of the Irish Insurance Federation said the decision was good news for Irish policyholders. "We always knew this possibility existed and were anxious to expedite a positive result." He said the main lesson to learned from the collapse of Independent Insurance was that solvency supervision was the ultimate form of consumer protection.