—(1) Where under any policy issued for the purposes of this Act a person (referred to in this Act as the insured) is insured against liabilities to third parties which he may incur then —
in the event of the insured becoming bankrupt or making a composition or arrangement with his creditors; or
in the case of the insured being a company in the event of —
a winding-up order being made or a resolution for a voluntary winding up being passed with respect to the company;
a receiver or manager of the company’s business or undertaking being duly appointed; or
possession being taken by or on behalf of the holders of any debentures secured by a floating charge of any property comprised in or subject to the charge,
if either before or after that event any such liability as aforesaid is incurred by the insured his rights against the insurer under the policy in respect of the liability shall, notwithstanding anything in any written law to the contrary, be transferred to and vest in the third party to whom the liability was so incurred.
(2) Where an order is made under section 148 of the Bankruptcy Act (Cap. 20) for the administration in bankruptcy of the estate of a deceased debtor then if any debt provable in bankruptcy is owing by the deceased in respect of a liability against which he was insured under a policy issued for the purposes of this Act as being a liability to a third party the deceased debtor’s rights against the insurer under the policy in respect of that liability shall notwithstanding anything in the Bankruptcy Act (Cap. 20) be transferred to and vest in the person to whom the debt is owing.
(3) Any condition in a policy issued for the purposes of this Act purporting, directly or indirectly, to avoid the policy or to alter the rights of the party thereunder upon the happening to the insured of any of the events specified in subsection (1)(a) or (b) or upon the making of an order under section 148 of the Bankruptcy Act in respect of his estate shall be of no effect.
(4) Upon a transfer under subsection (1) or (2), the insurer shall, subject to section 12, be under the same liability to the third party as he would have been under to the insured but —
if the liability of the insurer to the insured exceeds the liability of the insured to the third party nothing in this Act shall affect the rights of the insured against the insurer in respect of the excess; and
if the liability of the insurer to the insured is less than the liability of the insured to the third party nothing in this Act shall affect the rights of the third party against the insured in respect of the balance.
(5) For the purposes of this section and sections 11 and 12, the expression “liabilities to third parties” in relation to a person insured under any policy of insurance shall not include any liability of that person in the capacity of insurer under some other policy of insurance.