What is indemnity insurance and why you may need it?
When buying or selling a property, there may be possible legal defects, which though of low risks, may prove costly to you in the future and disrupt the complete enjoyment of your ownership.
For a one off payment, you will get a policy which will protect you from having to pay penalties in relation to legal defects in the property. They will cover you and the subsequent owners of the property.
For instance, your desired property may not have building regulation certification and you are adamant on purchasing the property. If you take out an indemnity policy, then the policy will protect you from any costs in the future if the local authority brings a claim against you because you do not have the certificate. However, you should take note that indemnity insurance will not cover the cost to repair or replace something.
What Indemnity Insurance Policies cover?
If you are desirous of purchasing a property which has a legal defect that will either be too costly to resolve, too time consuming to resolve, or cannot be resolved, or if you are selling property with such defects due to which it is unable to attract any customer, then you should consider your option to take out an indemnity insurance that covers the specific potential problem.
Commonly sought Indemnity Insurance Policies
Commonly people seek indemnity insurance to cover the following potential defects:
Restrictive Covenant Indemnity Insurance Policy
If your seller informs you that he was in breach of a restrictive covenant which has remained unchallenged, you may take out a restrictive covenant indemnity insurance policy.
Planning Permission Indemnity Insurance
If some alterations have been made to your desired property by the seller in the past without planning permission, the local authority may seek to bring a claim against you if you go on to purchase the property. For this reason, you may take out a planning permission indemnity insurance policy.
Indemnity Insurance for boilers
When a sale of a property takes place, the seller has to provide you with an installation certificate for your boiler. If the certificate is not in place you may take out indemnity insurance for boiler. Nevertheless, even if you are taking out an indemnity insurance policy for boiler, you should still ensure that the boiler is safe as repairs or replacing cost will not be covered by the policy.
Indemnity Insurance Policy for windows
There is a legal requirement in England and Wales which regulates installation of new windows and doors in a property. If the FENSA Certificate is missing, it is will beneficial to take out an indemnity insurance policy, in case the local authority initiates action against you because the windows or doors are not in compliance with building regulations.
Chancel Repair Indemnity Insurance
There is an ancient law which imposes a condition on owner of some properties to contribute towards repairs of church. This can be found out through personal local authority search If you are desirous of purchasing such a property, you may take out a policy that will cover the costs for church repairs.
Absence of Easement Idemnity Insurance
If in order to access your property, you need to cross or use your neighbour’s property and you have not been granted the right of easement, you may take out indemnity insurance policy to cover this specific defect and protect the value of your property.
What can an Indemnity Insurance Policy cost?
Indemnity Insurance policies cost varies and depends on the value of your property and what the policy covers. Typically indemnity insurance policies can cost you anywhere between £20 to £300.
Indemnity insurance policies are a last resort to protect you from legal defects with a property that cannot be so easily fixed. It will cover a number of matters but do not include repairs and replacement costs. You should talk to your solicitor or licensed conveyancer who will advice you regarding the potential legal defects in the property and your options.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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