Legal indemnity insurance
Legal indemnity insurance is available to a purchaser where there is a legal defect that cannot easily be resolved during the purchase of a commercial or residential property. This includes for example a lack of planning permission or missing building certificates. It is often used as a quick solution to the problem and can be cheaper than correcting the defect. Unlike conventional insurance policies, the premium for legal indemnity insurance is only paid once and the policy usually transfers to successors in title and lasts for the life of the property.
The price of the indemnity insurance premium is generally calculated based on the value of the property rather than the level of the risk. However, if the purchase price of a property increases, a premium would typically be paid by the insured when they come to sell to increase the limit of cover.
The Council of Mortgage Lenders Handbook provides guidance for conveyancers acting on behalf of lenders in residential conveyancing transactions and provides guidance on the use of indemnity insurance policies.
The majority of defects can be covered by legal indemnity insurance, but some of the more common types of policy are discussed below.
Where a part of a property is accessed over private land but there is no legal right to do so, or where the property is serviced by services (cables, drains etc) which are private or cross private land, it is possible to take out easement indemnity insurance. When supported by a statutory declaration it is a requirement that the right has been exercised unchallenged for at least 12 months. If a declaration is not available, it must have been exercised for at least 5 years. The policy will provide compensation for any financial losses suffered in the event that the use of the right is challenged. This includes legal costs in defending the challenge and loss of value to the property in the event that the challenge is successful.
 Lack of planning permission/building regulations approval
It is possible to obtain insurance where a property has been built, altered or extended without planning permission or building regulations approval. Usually it is only possible to obtain insurance for works that were undertaken at least 12 months ago (or four years for construction of a new property).
 Related articles on Designing Buildings Wiki.
- 3D animation for insurance risk analysis.
- Building Users' Insurance Against Latent Defects.
- Collateral warranties.
- Contract works insurance.
- Contractors' all-risk insurance.
- Decennial liability.
- Directors and officers insurance.
- Employer's liability insurance.
- Flood insurance.
- Indemnity clauses in design and construction contracts.
- Indemnity to principals.
- Integrated project insurance.
- Latent defects insurance.
- Professional Indemnity Insurance.
- Public liability insurance.
- Residual value insurance.
 External references
Featured articles and news
Have a look at our article explaining the different types of construction contractor.
Futurist Thomas Frey explores the concept of Disposable Housing - could it be a reality sooner than we imagine?
ICE to host new exhibition offering a window onto the civil engineering achievements beneath our feet.
Do you know all the various types of defects in brickwork?
US museum reveals plans for an installation made entirely of paper tubes.
Review of a book looking at how contemporary architecture found its expression within neoliberal capitalism.
The Great Mosque of Djenne, the largest mud-brick building in the world.
Amanda Clack, RICS President offers recommendations to government on Brexit and the construction skills shortage.
Tired of the commute? This architecture firm believes the best solution is to take cars underground.
Why do so many women leave engineering? Probably not for the reason you’re thinking.
For over 30 years David Trench was one of the UK's leading project managers. Read about his career through some of his most famous projects.
Leading institutes join forces calling for property flood resilience measures to help householders avoid repeat flooding.