[QUOTE 3518195, member: 9609"]I think this is all quite well established that insurance companies will look for any excuse not to pay out to the first party, but this was about refusing to pay out to the third party. I do view insurance companies as the lowest of the low, but this seems to fall to new depths.[/QUOTE]
The problem is not that the insurance company is refusing to pay the 3rd party, it is the public's (your) perception of how this works.
The 3rd party is not insured by the drivers insurance company, they haven't paid any premium to them have they? Therefore they have no obligation to pay them if the drivers insurance is invalid for whatever reason. The 3rd party has a claim against the driver not the insurance company.
They don't pay and are not legally obliged to either because they know that the 3rd party should and will be paid by the MIB, to which the insurance company has paid a portion of the premium for just such an occurrence .