206Amount of liability charge on insurance money payable

206 Amount of liability charge on insurance money payable against liability (a) a person (the insured) has entered into a contract of insurance by which the insured is indemnified against liability to pay damages or compensation; and (b) an event happens that gives rise to a claim against the insured for damages or compensation. (2) On the happening of the event, the amount of the insured’s liability in relation to the event becomes a charge on all insurance money that is or may become payable in relation to the liability. (3) If, when the event happens, the insured is a corporation that is being wound up, or if any subsequent winding-up of the insured is taken to have begun on or before the happening of the event, subsection (2) applies despite the winding-up. (4) A charge under this section has priority over all other charges affecting the insurance money. (5) However, if the insurance money is subject to 2 or more charges under this section— (a) the charges have priority between themselves in the order of the happening of the events out of which the liabilities arose; and (b) charges that arise out of events happening on the same day rank equally between themselves.