41Contracts of liability insurance—consent of insurer required for settlement etc. of claim

#### 41 Contracts of liability insurance—consent of insurer required for settlement etc. of claim (1) This section applies in relation to a contract of liability insurance if it would constitute a breach of the contract if, without the consent of the insurer, the insured or any third party beneficiary were: (a) to settle or compromise a claim against the insured or third party beneficiary; or (b) to make an admission or payment in respect of such a claim. (2) If the insured or any third party beneficiary (the claimant) under the contract has made a claim under the contract, the claimant may at any time, by notice in writing given to the insurer, require the insurer to inform the claimant in writing: (a) whether the insurer admits that the contract applies to the claim; and (b) if the insurer so admits—whether the insurer proposes to conduct, on behalf of the claimant, the negotiations and any legal proceedings in respect of the claim made against the claimant. (3) If the insurer does not, within a reasonable time after being given a notice under subsection (2), inform the claimant: (a) that the insurer admits that the contract of liability insurance applies to the claim; and (b) that the insurer proposes to conduct, on behalf of the claimant, the negotiations and any legal proceedings in respect of the claim made against the claimant; then: (c) the insurer may not refuse payment of the claim; and (d) the amount payable in respect of the claim is not reduced; by reason only that the claimant breached the contract as mentioned in subsection (1).