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In the following article, we will discuss electrical indemnity insurance at length.
What is electrical indemnity insurance?
Electrical indemnity insurance protects sellers and buyers in property transactions involving uncertified electrical work.
It offers peace of mind if electrical work in a home does not meet local building control regulations.
This insurance covers costs arising from legal disputes or requirements to rectify the non-compliant work.
You can obtain a copy of the certification from the local building control office if you were not issued one.
What protection will the insurance provide?
Electrical indemnity insurance protects against legal action and the costs of non-compliance with building regulations standards, specifically regarding electrical installations. This insurance is relevant when a homeowner sells a property with electrical work that lacks a completion certificate or has not been notified to local building control.
Read more about how to sell a house without having building control regulations approval.
When is it necessary?
The need for this insurance arises when selling a home with uncertified electrical work, such as a new socket outlet or a shower room with an unapproved electrical circuit. It's particularly important when the original electrician is unavailable to certify the work or when there's a missing electrical installation certificate (EIC).
We also have a detailed article about the legal requirement of having an electrical installation certificate.
Why electrical compliance matters in home sales
Electrical compliance is integral to the conveyancing process for several reasons.
Compliance ensures the safety of the property’s electrical system, in line with local authority regulations. Non-compliance can affect the transaction, impacting both the seller's and buyer's legal positions.
Impact on property value and saleability
Uncertified electrical installations can devalue a property and deter buyers. An electrical installation condition report (EICR) indicating non-compliance might lead buyers to renegotiate the selling price or even withdraw from the purchase.
Legal implications of non-compliance
Non-compliance with building regulations can be a criminal offence in the UK. Selling a property without addressing these issues may lead to legal challenges from the new owner or local building control body. Indemnity insurance mitigates these risks.
Electrical installation certificate (EIC)
What is an EIC?
The Electrical Installation Certificate (EIC) is a formal document that verifies the safety and compliance of electrical work on a property.
When a new electrical circuit is installed or significant modifications are made to an existing circuit, a qualified electrician provides this certificate. It verifies that the electrical work adheres to the UK's strict safety standards, specifically the British Standard BS 7671.
This standard is the national benchmark for the safety of electrical installations. The EIC includes details such as the nature of the electrical work carried out, the date of completion, and the identity of the certifying electrician and their supervising body.
It's a vital document in residential properties, especially when selling your home, as it instils confidence in potential buyers about the safety and compliance of the electrical systems in the property.
Is an EIC legally required?
Yes, in the UK, obtaining an EIC is a legal requirement for specific types of electrical work. This is particularly true when adding a new circuit to a property or making significant changes to an existing circuit.
The requirement is rooted in the UK Building Regulations, which stipulate that electrical work must meet specific safety criteria. The EIC demonstrates that such work meets these criteria.
Local authorities enforce these regulations, and failure to comply can lead to penalties. In the context of selling a house, the absence of an EIC can raise questions from the buyer's solicitor, complicating the conveyancing process.
It's not just a matter of legal compliance; it's about ensuring the safety and security of those who inhabit the property.
For a homeowner looking to sell, the EIC is a clear indication that the electrical aspects of their home are up to standard, making the property more attractive to buyers and avoiding delays in the selling process.
Assessing your electrical installation status
Building regulations and safety standards
Building regulations in the UK ensure the safety and standards of electrical installations. Compliance with these regulations is mandatory.
Homeowners need to understand these regulations to ensure their property's electrical systems are up to code. Non-compliance can lead to issues during the conveyancing process.
Understanding Part P requirements
Under Part P of the building regulations, certain electrical works in a home, like installing new security lights or a sauna heater, require notification to local authority building control. Compliance ensures the work is safe and meets legal standards. A missing EIC indicates these requirements might have been overlooked.
Getting the building regulation officer's approval
Building regulation officers from local authorities inspect and certify electrical works. Their approval results in a building regulations compliance certificate.
This document is a must for proving that your electrical installation work, such as adding a circuit installed for a swimming pool, adheres to the required standards.
Importance of certification
Certification documents, like the electrical installation works certificate, are more than formalities. They assure future homeowners of the safety and legality of your property's electrical system.
Whether it's minor electrical work like a new plug socket or significant changes like a circuit breaker installation, certification is required for a smooth conveyancing process.
Identifying uncertified electrical work
Uncertified electrical work poses risks and complications during property sales. Homeowners should inspect their electrical systems for any modifications or additions that may not have been certified. Identifying these areas early can prevent delays and complications in the selling process.
How can a registered electrician help
Registered electricians are integral to ensuring electrical work complies with UK standards. They can issue an EIC after inspecting and testing the electrical installation.
Homeowners should engage a certified electrician to assess and certify any uncertified work. This step is central to preparing a property for sale.
Do minor electrical installation works require certification?
Minor electrical installation works, like adding new plug sockets or light fixtures, also require certification. Even these basic tasks need to meet the UK's building regulations. Homeowners should ensure that all minor works are documented and certified to avoid issues during conveyancing.
Read our article if you want to have a deeper understanding of the conveyancing process for sellers.
Checking for previous electrical installation work certificates
Homeowners should gather any previous electrical installation works certificates. These documents provide a history of the electrical work carried out on the property. They are important in demonstrating compliance with building regulations.
Consequences of a missing EIC
Impact on conveyancing
A missing Electrical Installation Certificate (EIC) complicates the conveyancing process. For you, the homeowner, it raises questions about the safety and compliance of your electrical installations.
Your conveyancing solicitor may highlight that uncertified electrical works could delay the sale. Interested buyers might be wary, and concerned about the integrity of the electrical system.
Legal ramifications
In the absence of an EIC, legal complications may arise. Local authorities could view this as non-compliance with building regulations. This non-conformance can lead to enforcement action.
As a seller, you're liable for ensuring that any electrical installation work, whether a new plug socket or a consumer unit, meets current standards.
Options for resolution
Facing a missing EIC? You have options! An indemnity insurance policy often emerges as a practical solution. This indemnity policy acts as a safeguard against certain legal actions related to non-compliance.
However, it's not a fix-all. The insurance doesn't rectify the underlying electrical issues but provides a layer of financial protection during the property transfer.
FAQs
What happens if I don’t get indemnity insurance?
If you choose not to secure an indemnity policy, you risk legal disputes or delays in the sale process. These disputes often stem from non-compliance with building regulations or missing documentation, such as an EIC. Without indemnity insurance, these issues may fall to you to resolve, incurring costs and impacting the sale timeline.
How much does indemnity insurance cost?
The cost of indemnity insurance varies depending on several factors, including the scope of the policy and the value of the property.
In general, indemnity insurance for electrical work is relatively affordable, especially when compared to the costs of rectifying electrical non-compliance issues. Conveyancing solicitors can provide tailored advice on selecting a policy that offers both adequate protection and value.
Can I sell my home without an EIC?
Selling your home without an Electrical Installation Certificate (EIC) is possible, but it presents challenges. Conveyancing solicitors often advise obtaining either an EIC or an electrical installation condition report to ensure compliance with local authority regulations.
Without these certificates, you may face difficulties in proving the safety and compliance of electrical installations to potential buyers, which can impact the attractiveness and perceived value of your property.