Legal indemnity insurance
Contents |
[edit] Introduction
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.
[edit] Common risks covered
The majority of defects can be covered by legal indemnity insurance, but some of the more common types of policy are discussed below.
[edit] Lack of rights (absence of easement indemnity insurance)
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.
[edit] 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).
[edit] Flying freehold
If part of one property overhangs a neighbouring property, it is known as a flying freehold. The details of the policy cover will depend on the exact nature of the flying freehold.
[edit] Related articles on Designing Buildings Wiki.
- 3D animation for insurance risk analysis.
- Bondsman
- Building Users' Insurance Against Latent Defects.
- Collateral warranties.
- Commercial landlord and building insurance.
- 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.
- Insurance.
- Integrated project insurance.
- Latent defects insurance.
- Making sure your builder has appropriate insurance.
- Professional Indemnity Insurance.
- Public liability insurance.
- Residual value insurance.
- Single project professional indemnity insurance
[edit] External references
Featured articles and news
ECA Industry Awards 2024 shortlist revealed
22 leading businesses from across the electrotechnical and engineering services sector.
Government unveils Skills England strategy
Skills England to transform opportunities and drive growth.
New Government Hub for York Given Planning Green Light
For up to 2,600 civil servants, due for completion by 2028.
Construction Skills Certification Scheme cards
July update on Professionally Qualified and Academically Qualified Person Cards.
BSRIA Briefing 2024, November 22
Sustainable Futures: Redefining Retrofit for Net Zero Living.
The CLC on driving competency in the retrofit sector
Previously published roadmap on skills for net zero.
The first labour government King's speech in fifteen years
Construction industry reactions, support and some concern.
CIOB Retrofit of Buildings Technical Information Sheet
What retrofit is, the approach to be taken and processes to be followed.
Adapting Historic Buildings for Energy and Carbon Efficiency
Historic England advice note 18, free download published.
10 retrofit projects revisited 10 years after completion.
Information orders, building liability orders and SPVs
Key BSA terms and how they impact special purpose vehicles.
Listed despite problems with its design.
Zen and the art of cycling exploration.
Design Council Homes Taskforce launched
To support government 1.5 million homes target within UK climate commitments.