63.—(1) A guarantee shall be an approved guarantee for the purposes of this Act if, but only if, it complies with the following conditions;

(a) it is issued by a vehicle insurer or a vehicle guarantor to a person (in this Act referred to as the principal debtor) named therein;

(b) the insurer or guarantor by whom it is issued binds himself by it to guarantee the payment by the principal debtor or his personal representative of all sums without limit which the principal debtor or his personal representative shall become liable to pay to any person (exclusive of the excepted persons) whether by way of damages or costs on account of injury to person or property caused by the negligent use during the period (in this Act referred to as the period of cover) specified in that behalf in the guarantee, of a F204[vehicle] to which the guarantee relates, by the principal debtor or by any of such other persons (if any) as are mentioned or otherwise indicated in that behalf in the guarantee;

(c) the liability under the guarantee of the insurer or guarantor by whom it is issued is not subject to any condition, restriction, or limitation prescribed as not to be inserted in an approved guarantee; and

(d) the period of cover is not capable of being terminated before its expiration by effluxion of time by the insurer or guarantor save either with the consent of the principal debtor or after seven days’ notice in writing to the principal debtor.

(2) A guarantee which complies with the conditions specified in subsection (1) of this section shall not be prevented from being an approved guarantee merely by reason of its containing provisions additional to and not inconsistent with the provisions required by those conditions.

(3) A guarantee shall not be prevented from being an approved guarantee merely by reason of the guarantee being subject to the following limitation and the following exception or either of them:

(a) the limitation thereof, in so far as it relates to injury to property, to the sum of one thousand pounds in respect of injury occasioned by any one act of negligence or any one series of acts of negligence collectively constituting one event,

(b) the exception therefrom of any liability (in excess of the common law or the statutory liability applicable to the case) undertaken by the principal debtor by special contract.

(4) An approved guarantee issued by a vehicle insurer shall, for the purposes of sections 25, 26 and 27 of the Insurance Act, 1936, be regarded as if it were a policy issued by the insurer in the course of carrying on F204[vehicle] insurance business within the meaning of section 3 of that Act.