Chapter III. Non-life Insurance
Section 4. Liability Insurance
(Liability of a Liability Insurer)
When the insured is legally obligated to indemnify a third party and receives a claim in connection therewith, the liability insurer is liable to provide indemnification.
(Assumption of the Necessary Expenses)
All necessary litigation or non-litigation expenses incurred by the insured to raise a defense against a third party's claim shall, unless otherwise stipulated in the contract, be borne by the insurer.
The insured may request that the insurer advance the expenses referred to in the preceding paragraph.
(Contract for the Benefit of Third Parties)
Where an insurance contract has been entered into to cover the liability of an enterprise run by the insured for loss indemnification, liability for loss indemnification borne by any agent, manager, or supervisor of the insured shall also be entitled to the benefit of the insurance, and the contract shall be deemed to have been entered into concurrently for the benefit of third parties.
(Insurer’s Right of Participation)
An insurer may stipulate in a contract that any acknowledgment, settlement, or indemnification made by the insured in connection with its liability toward a third party without the participation of the insurer is not binding on the insurer, provided that this rule does not apply where the insurer, having been requested by the proposer or insured to participate, has refused to do so without legitimate reason or has delayed its participation on pretext.
(Restrictions on Payment of the Insured Amount to an Insured)
Prior to indemnification of a third party for loss caused by an event attributable to the insured, an insurer may not pay all or any part of the insured amount to an insured.
Where the insured has been determined liable to indemnify a third party for loss, the third party may claim for payment of indemnification, within the scope of the insured amount and based on the ratio to which the third party is entitled, directly from the insurer.
(Indemnification to the Third Party)
The insurer may, upon being notified by the insured, indemnify the third party directly.