49Where sum insured exceeds value of insured’s interest

#### 49 Where sum insured exceeds value of insured’s interest (1) This section applies where: (a) a loss occurs in respect of property that is the subject‑matter of a contract of general insurance; and (b) the insured and some other person each have an interest in the property; but does not apply where: (c) the contract of insurance does not provide insurance cover in respect of an interest in the property that is not the insured’s interest; and (d) before the contract was entered into, the insurer clearly informed the insured in writing that the insurance cover provided by the contract would not extend to such an interest. (2) A reference in this section to the amount of the insurer’s notional liability is a reference to the amount for which the insurer would have been liable to the insured in respect of the particular claim if the insured had been the only person who had an interest in the property. (3) Where: (a) the amount of the insurer’s notional liability exceeds the amount of the insurer’s liability to the insured in respect of the loss; and (b) within 3 months after the day on which the loss occurred, a person who is not the insured but has an interest in the property gives to the insurer a notice in writing informing the insurer of the person’s interest; the insurer is liable, at the expiration of that period, to pay to that person an amount equal to the amount by which the amount of the insurer’s notional liability exceeds the amount of the insured’s loss. (4) Where 2 or more persons have served notices under this section, the amount ascertained under subsection (3) shall be divided between them in proportion to the values of their interests in the property. (5) Nothing in subsection (3) renders the insurer liable to pay to a person an amount exceeding the amount of the loss suffered by that person. (6) Where: (a) the amount of the insurer’s notional liability exceeds the amount of the liability to the insured in respect of the loss; (b) the insurer has paid to the insured the amount of the notional liability; and (c) the insurer did not know, and could not reasonably be expected to have known, that a person other than the insured had an interest in the property; subsection (3) does not apply, but a person who is not the insured may recover from the insured an amount that bears to the amount of the notional liability the same proportion as the value of that person’s interests in the property bears to the total value of all persons’ interests in the property.