(1) A guarantee shall be an approved guarantee within the meaning of this Act if, but only if, it complies with all the following conditions, that is to say: -
(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; and
(b) the vehicle insurer or vehicle 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 (other than the excepted persons as defined in this Act) whether by way of damages or costs on account of injury to person or property occasioned by the negligent driving during the period (in this Act referred to as the period of cover) specified in that behalf in such guarantee of a mechanically propelled vehicle to which such guarantee relates by the principal debtor or by any of such other perso