35Insurance held by vendor to enure for benefit of purchaser

35 Insurance held by vendor to enure for benefit of purchaser

(1) During the period between the making of a contract for the sale of land and the purchaser becoming entitled to possession or to the receipt of rents and profits pursuant to the terms of the contract, any policy of insurance maintained by the vendor in respect of any damage to or destruction of any part of the land agreed to be sold pursuant to the contract shall in respect of the said land, to the extent that the purchaser is not entitled to be indemnified under any other policy of insurance, enure for the benefit of the purchaser as well as for the vendor and the purchaser shall be entitled to be indemnified by the insurer under any such insurance policy in the same manner and to the same extent as the vendor would have been if the land had not been subject to the contract.

(2) It shall not be a defence or answer to any claim by the purchaser against the insurer made under subsection (1) hereof that the vendor otherwise would not be entitled to be indemnified by the insurer because the vendor has suffered no loss or has suffered diminished loss by reason of the fact that the vendor is entitled to be paid the purchase price or the balance thereof by the purchaser.

(3) A policy of insurance shall not enure for the benefit of a purchaser under subsection (1) hereof if the insurer establishes that a prudent insurer would not have insured the purchaser against the risk covered by the policy.

(4) At any time prior to the happening of the risk insured against an insurer made liable to a purchaser under subsection (1) may terminate that liability by giving notice of such termination to the purchaser in not less than three clear business days.

(5) A notice under subsection (4) shall be in writing and shall be served upon the purchaser personally or in the case of a company by leaving it at the company's registered office.

(6) The contract of insurance shall terminate at the expiration of the period specified in the notice.

(7) The service of a notice under subsection (4) shall not affect the liability of the insurer to the vendor under the policy of insurance.

(8) Where money becomes payable under a policy of insurance in respect of any damage to or destruction of part of the land agreed to be sold the money shall, on completion of the contract be held or receivable by the vendor on behalf of the purchaser and paid by the vendor to the purchaser on completion of the sale or as soon as the money is received by the vendor (whichever is the later).

(9) Notwithstanding subsection (1) an insurer shall not be entitled to deny liability to the purchaser because of a fault on the part of the vendor by reason of which the vendor would not be entitled to make a claim under the policy.