Section 560 | Meaning of “qualifying insurance contract”

(1)In section 558 “qualifying insurance contract” means a contract of insurance which meets conditions A, B, C and D.

(2)Condition A is that, so far as the risks insured against are concerned, the contract only relates to one or more of the following—

(a)the indemnification of a former employee against a liability related to the former employment,

(b)the indemnification of a person against vicarious liability in respect of a liability related to another person’s employment,

(c)the payment of costs or expenses incurred—

(i)in connection with a claim that a person is subject to a liability to which the insurance relates, or

(ii)in connection with any proceedings relating to or arising out of a claim that a person is subject to a liability to which the insurance relates,

(ca)the payment of costs or expenses incurred in connection with a former employee giving evidence about matters related to the former employment in, or for the purposes of—^F1

(i)a proceeding or other process (whether or not involving the former employee), or^F1

(ii)an investigation (whether or not likely to lead to any proceeding or other process involving the former employee).^F1

(cb)the payment of any costs or expenses incurred in connection with a proceeding or other process, or an investigation, in which—^F1

(i)acts of a former employee related to the employment, or^F1

(ii)any other matters related to the former employment of a former employee,^F1

are being or are likely to be considered,

(d)the indemnification of an employer against loss from a payment made by the employer to a former employee in respect of—

(i)a liability related to the former employment, or

(ii)any costs or expenses incurred as mentioned in paragraph (c) , (ca) or (cb) .^F2

(3)Condition B is that—

(a)the period of insurance under the contract does not exceed 2 years or, if it does, it does so only because of one or more renewals, each for a period of 2 years or less, and

(b)the insured is not required to renew the contract for any period.

(4)Condition C is—

(a)that the insured is not entitled under the contract to receive any payment or other benefit in addition to—

(i)cover for the risks insured against, and

(ii)any right to renew the contract, or

(b)if the insured is so entitled, that the part of the premium reasonably attributable to the entitlement is not a significant part of the whole premium.

(5)Condition D is that the contract is not connected with another contract.