Insurance Law Reform Act 1985

13 Purchaser of land entitled to benefits of insurance between dates of sale and possession

(1)

Subsection (1A) applies during the period beginning with the making of a contract for the sale of land and all or any fixtures on that land, and ending on the purchaser taking possession of the land and fixtures, or final settlement (whichever occurs first).

(1A)

During the period specified in subsection (1), any policy of insurance maintained by the vendor in respect of any damage to or destruction of any part of the land or fixtures enures, in respect of the land and fixtures agreed to be sold and to the extent that the purchaser is not entitled to be indemnified or to require reinstatement of that land and those fixtures under any other policy of insurance, for the benefit of the purchaser as well as the vendor.

(1B)

In particular, the purchaser is entitled to be indemnified by the insurer or to require the insurer to reinstate that land and those fixtures in the same manner and to the same extent as the vendor would have been so entitled under the policy if there had been no contract of sale.

(1C)

However, nothing in subsections (1A) and (1B) obliges an insurer to pay or expend more in total under a policy of insurance than it would have had to pay or expend if there had been no contract of sale.

(2)

It shall not be a defence or answer to—

(a)

a claim by a purchaser against an insurer under this section, that the vendor otherwise would not be entitled to be indemnified by the insurer or to require reinstatement because the vendor has suffered no loss or has suffered diminished loss because the vendor is or was entitled to be paid all, or the balance of, the purchase price, by the purchaser; or

(b)

any claim under this section by a purchaser against the vendor’s insurer in relation to the land or fixtures sold, that the purchaser’s entitlement under the policy to which the claim relates is affected or defeated by the existence or terms of another policy; or

(c)

any claim by a purchaser against an insurer (other than the vendor’s insurer) that the purchaser’s entitlement under the policy to which the claim relates is affected or defeated by a claim under this section.

(3)

Where, in respect of a contract for the sale of land and all or any fixtures thereon,—

(a)

there is damage to or destruction of any part of the land or fixtures during the period specified in subsection (1); and

(b)

the whole or part of the amount payable in respect of the damage or destruction under the policy of insurance maintained by the vendor is payable to a mortgagee of, or any person claiming through, the vendor—

the purchase price payable under the contract of sale shall be reduced by the amount so payable to the mortgagee or person claiming through the vendor.

(4)

In this section, vendor includes a mortgagee of the vendor and any person claiming through the vendor.

(5)

This section shall not apply to the extent that the purchaser and vendor under a contract of sale expressly agree at any time.

(6)

This section—

(a)

shall apply only in respect of contracts of sale made after the commencement of this Act; and

(b)

subject to subsection (5), shall have effect notwithstanding any provision to the contrary in any enactment, rule of law, policy of insurance, deed, or contract; and

(c)

shall apply, with all necessary modifications, in respect of a sale or exchange of land and fixtures by order of a court as if the order were a contract of sale.

Section 13(1): substituted, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).

Section 13(1A): inserted, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).

Section 13(1B): inserted, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).

Section 13(1C): inserted, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).

Section 13(2)(a): substituted, on 1 January 2008, by section 364(1) of the Property Law Act 2007 (2007 No 91).