(1)  The owner of a lot may enter into a policy of insurance insuring the lot for an amount equal to the amount secured at the date of the future loss to which the policy relates by mortgages over the lot.

(2)  If such a policy of insurance is in force –

(a) payment must, subject to the terms of the policy, be made by the insurer to the mortgagees whose interests are noted in the policy in the order of their respective priorities; and

(b) subject to the terms and conditions of the policy, the insurer is liable to pay –

(i) the amount stated in the policy; or

(ii) the amount of the loss; or

(iii) an amount sufficient, at the date of the payment, to discharge the mortgages –

whichever is the least amount.

(3)  If the amount so paid by the insurer equals the amount necessary to discharge a mortgage over the lot, the insurer is entitled to an assignment of the mortgage, and if the amount is less than the amount necessary to discharge a mortgage over the lot, the insurer is entitled to obtain from the mortgagee a transfer of a proportion of the mortgagee's interest equal to the proportion that the amount of the payment bears to the amount owing under the mortgage immediately before the payment.

(4)  Money received under such a policy of insurance is not liable to be brought into contribution with any other money received under another policy of insurance, except where the other policy is in respect of damage to the same lot and relates to the same mortgage debt.