Section 15Part 0 —
Duty of insurers to satisfy judgments against persons insured in respect of third party risks
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If, after a certificate of insurance has been issued under section 4(3) in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (b) of section 4(1) (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall, subject to this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any law relating to interest on judgments.
No sum shall be payable by an insurer under subsection (1) —
liability for which is exempted from the cover granted by the policy under any proviso to section 4(1);
in respect of any judgment, unless before or within thirty days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings; such notice to be deemed to be given by the posting of a registered prepaid envelope containing the notice to the address of the insurer given in the certificate of insurance and such notice being deemed to have reached the insurer within fourteen days of the time at which it was posted;
in respect of any judgment, so long as execution thereof is stayed pending an appeal; or
in connection with any liability, if before the happening of the event which was the cause of the death, bodily injury or damage to property giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein and —
before the happening of the said event, the certificate was surrendered to the insurer or the person, in whose favour the certificate was issued, made a statutory declaration stating that the certificate had been lost or destroyed;
after the happening of the said event, but before the expiration of a period of fourteen days from the taking effect of the cancellation of the policy, the certificate was surrendered to the insurer or the person in whose favour the certificate was issued made such a statutory declaration as aforesaid; or
either before or after the happening of the said event, but within the said period of fourteen days, the insurer has commenced proceedings under this Law in respect of the failure to surrender the certificate.
No sum shall be payable by an insurer under subsection (1), if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular, or if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:
Provided that an insurer who has obtained such a declaration in an action shall not thereby become entitled to the benefits of this subsection as respects any judgment contained in proceedings commenced before the commencement of that action, unless before or within ten days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given, shall be entitled, if he thinks fit, to be made a party thereto.
If the amount for which an insurer becomes liable under this section to pay in respect of a liability of the person insured by a policy exceeds the amount for which he would, apart from the provisions of this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person.
In this section —
"material" means of such a nature as to influence the judgment of a prudent insurer in determining whether he would take the risk, and if so, at what premium and on what conditions;
"liability covered by the terms of the policy" means a liability which is covered by the policy or which would be covered but for the fact that the insurer is entitled to avoid or cancel, or has avoided or cancelled the policy; and
"judgment" does not include a judgment of any court which does not have jurisdiction in the Islands, or the judgment of a court having jurisdiction in the Islands enforcing or giving effect to such a judgment enforced under the Foreign Judgments Reciprocal Enforcement Law (1996 Revision).
Defined Terms
materialliability covered by the terms of the policyjudgment
Cross References
- Section of Foreign Judgments Reciprocal Enforcement Law
Enforcement of foreign judgments