—(1) A contract of insurance may be entered into by a subsidiary proprietor in respect of damage to his lot in a sum equal to the amount secured at the date of the contract by mortgages of and charges affecting his lot and where such a contract is in force —
subject to the terms and conditions of the contract —
any payment to be made under that contract by the insurer in respect of damage shall be made to the mortgagees and chargees whose interests are noted thereon in order of their respective priorities; and
the amount of the payment shall be the amount stated in the contract, the amount of the loss, or an amount sufficient at the date of the loss, to discharge mortgages of and charges affecting the lot, whichever is the least amount;
where the amount so paid by the insurer equals the amount necessary to discharge a mortgage of the lot, the insurer shall be entitled to an assignment of the mortgage; and
where the amount so paid by the insurer is less than the amount necessary to discharge a mortgage of the lot, the insurer shall be entitled to a sub-mortgage of that mortgage to secure the amount so paid on terms and conditions agreed upon as provided in subsection (2) or, failing agreement, on the same terms and conditions as those contained in the mortgage.
(2) For the purposes of subsection (1)(c), any insurer and mortgagee may at any time, whether before or after a contract of insurance referred to in subsection (1) has been entered into by a subsidiary proprietor, agree upon the terms and conditions of the sub-mortgage.
(3) A contract of insurance entered into as referred to in subsection (1) shall not be liable to be brought into contribution with any other such contract of insurance except another such contract of insurance which —
is in respect of damage to the same lot; and
relates to the same debt,
as that referred to in the contract of insurance first-mentioned in this subsection.