Conditions under which liability for payment by insurer arises

(1) If, after insurance has been effected or other contract of indemnity entered into or a bond securing the payment of compensation given pursuant to section 30 of this Act, an employer becomes liable to pay compensation to a workman or his dependants, then notwithstanding anything to the contrary in any policy of insurance, contract of indemnity or bond contained, the insurer or person liable to indemnify the employer or to secure the payment of compensation under a bond shall pay the compensation agreed upon or adjudged to be paid, including any sum payable in respect of costs, in the manner prescribed in section 14 of this Act. (2) No sum shall be payable by an insurer, or person liable under a contract of indemnity or a bond given to secure payment of compensation under this section, (a) unless, in the case of compensation agreed upon between an employer and a workman or his dependants, such insurer or other person liable as stated in subsection (1) of this section, consented to pay the sum agreed upon as compensation to the workman or his dependants; or (b) unless, in the case of compensation adjudged by the court to be paid to a workman or his dependants, the insurer or person liable as stated in subsection (1) of this section had notice of the application to determine the compensation in time to enable him to apply to be added as a co-defendant, if he is so minded; or in respect of any judgment to pay compensation, so long as execution thereon is stayed by the court or pending appeal; or in respect of a policy of insurance, if before the happening of the event which was the cause of death or personal injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein. (3) If notice of the application to determine any compensation is given to an insurer, or other person liable under a contract of indemnity or bond to secure the payment of compensation, in time to enable him to apply to the court to be added as a co-defendant, the court shall add the insurer or other such person as a co-defendant and he shall have the same right to defend the proceedings as if he were the employer. (4) Where any sum paid by the insurer or person liable to indemnify the employer or to secure the payment of 40 compensation under a bond is covered by the policy of insurance, contract of indemnity or bond (as the case may be) by virtue only of this section, such sum shall be recoverable by the insurer or other person as mentioned in this subsection from the employer. (5) Notwithstanding anything contained in this section, no insurer shall be liable to indemnify any employer against payment of compensation under section 8 (1) (d) of this Act during the first two days of incapacity.