Duty of insurers or persons giving security to satisfy judgment against persons insured or secured against third-party risksN.I.
[F198.—(1) This Article applies where, after—
(a)a certificate of insurance has been delivered under Article 92(4) to the person by whom a policy has been effected, or
(b)a certificate of security has been issued under Article 93(2) to the person to whom a security has been given,
a judgment to which this paragraph applies is obtained.
(2) Paragraph (1) applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under Article 92 and either—
(a)it is a liability covered by the terms of the policy or security to which the certificate relates, and the judgment is obtained against any person who is insured by the policy or whose liability is covered by the security, as the case may be; or
(b)it is a liability, other than an excluded liability, which would be so covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and the judgment is obtained against any person other than one who is insured by the policy or, as the case may be, whose liability is covered by the security.
(3) In deciding for the purposes of paragraph (2) whether a liability is or would by covered by the terms of a policy or security, so much of the policy or security as purports to restrict, as the case may be, the insurance of the persons insured by the policy or the operation of the security by reference to the holding by the driver of the vehicle of a licence authorising him to drive it shall be treated as of no effect.
(4) In sub-paragraph (2)(b), “"excluded liability”” means a liability in respect of the death of, bodily injury to, or damage to the property of any person who, at the time of the use which gave rise to the liability, was allowing himself to be carried in or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken, not being a person who—
(a)did not know and had no reason to believe that the vehicle had been stolen or unlawfully taken until after the commencement of his journey; and
(b)could not reasonably have been expected to have alighted from the vehicle.
In this paragraph the reference to a person being carried in or upon a vehicle includes a reference to a person entering or getting on to, or alighting from, the vehicle.
(5) Notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy or security, he shall, subject to the provisions of this Article, pay to the persons entitled to the benefit of the judgment—
(a)as regards liability in respect of death or bodily injury, any sum payable under the judgment in respect of the liability, together with any sum which is payable in respect of interest on that sum;
(b)as regards liability in respect of damage to property, any sum required to be paid under paragraph (6); and
(c)any amount payable in respect of costs.
(6) This paragraph requires—
(a)where the total of any amounts paid, payable or likely to be payable under the policy or security in respect of damage to property caused by, or arising out of, the accident in question does not exceed £250,000, the payment of any sum payable under the judgment in respect of the liability, together with any sum which is payable in respect of interest on that sum;
(b)where that total exceeds £250,000, the payment of either—
(i)such proportion of any sum payable under the judgment in respect of the liability as £250,000 bears to that total, together with the same proportion of any sum which is payable in respect of interest on that sum; or
(ii)the difference between the total of any amounts already paid under the policy or security in respect of such damage and £250,000 together with such proportion of any sum which is payable in respect of interest on any sum payable under the judgment in respect of the liability as the difference bears to that sum,
whichever is less, unless not less than £250,000 has already been paid under the policy or security in respect of such damage (in which case nothing is payable).
(7) Where as insurer becomes liable under this Article to pay an amount in respect of a liability of a person who is insured by a policy or whose liability is covered by a security, he shall be entitled to recover from that person—
(a)that amount, in a case where he became liable to pay it by virtue only of paragraph(3); or
(b)in a case where that amount exceeds the amount for which he would, apart from the provisions of this Article, be liable under the policy or security in respect of that liability, the excess.
(8) Where an insurer becomes liable under this Article to pay an amount in respect of a liability of a person who is not insured by a policy or whose liability is not covered by a security, he shall be entitled to recover the amount from that person or from any person who—
(a)is insured by the policy, or whose liability is covered by the security, by the terms of which the liability would be covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons; and
(b)caused or permitted the use of the vehicle which gave rise to the liability.
(9) In this Article and Article 98A—
“"insurer”” includes a person giving a security;
“"liability covered by the terms of the policy or security”” means a liability which is covered by the policy or security or which would be so covered but for the fact that the insurer is entitled to avoid or cancel, or has avoided or cancelled, the policy or security; and
“"material”” means of such a nature as to influence the judgment of a prudent insurer in determining whether he will take risk and, if so, at what premium and on what conidtions.]
F1SR 1989/84