Indemnity Insurance: Protecting Your Home

House indemnity insurance, also known as title indemnity insurance or legal indemnity insurance, is a type of insurance that protects future homeowners from potential issues with their property, including legal issues. It is purchased during the conveyancing process to cover a legal defect with the property that cannot be swiftly resolved or resolved at all. It is a single payment that covers the issue for the life of the property, unless the policy is invalidated.

Indemnity insurance covers legal costs and potential damages in lawsuits

Indemnity insurance is a protective cover against financial loss or liability. Its primary purpose is to compensate an insured party for losses or damages under the terms and conditions of the insurance contract. Indemnity insurance covers legal costs and potential damages in lawsuits. It primarily protects professionals from financial loss due to negligence, errors, or omissions in their work.

Indemnity insurance is a contractual agreement between two parties. In this arrangement, one party agrees to pay for potential losses or damage caused by the other party. The insured pays premiums to the insurance company in exchange for the assurance that the insurer will compensate for any damage or losses.

Indemnity insurance is particularly important when buying or selling a house. It can cover legal defects with the property that are either too costly or time-consuming to resolve. For example, if the seller cannot provide a building regulation certificate, the buyer can take out an indemnity policy to cover potential costs if the local authority pursues a claim.

Indemnity insurance does not cover the cost of repairing or replacing items. For instance, if there is an issue with a boiler, indemnity insurance will not cover the cost of repair or replacement. Instead, it is recommended to have installations checked by a competent contractor before purchasing a property.

Indemnity insurance is typically suggested by a conveyancing solicitor and can be obtained from specialist legal insurers. It usually takes 24 to 48 hours to obtain an indemnity insurance policy, but this may vary depending on the complexity of the application and the insurer's processing time. The cost of indemnity insurance depends on the property value and the policy coverage, typically ranging from £20 to £300 in the UK.

It protects against problems with planning permission

House indemnity insurance is a type of insurance that covers legal costs and potential damages in lawsuits. It is often suggested by a conveyancing solicitor when buying or selling a property. It covers legal defects with the property that are either impossible to resolve or would be costly and time-consuming to fix.

Indemnity insurance can protect against problems with planning permission. This includes situations where a previous owner has made alterations to the property without planning permission or without proof that alterations were completed within permitted development rights. It can also cover missing building regulation certificates.

For example, if the seller cannot provide key planning permission documentation relating to an extension they built, the buyer could face problems if a neighbour challenges the extension in the future. By taking out an indemnity insurance policy, the buyer can protect themselves against any loss of value or legal claims that may result from this issue.

Indemnity insurance for planning permission typically covers risks such as loss of market value, damages, and expenses arising from compliance with any enforcement notice or proceedings served by the appropriate authority. It is important to note that indemnity insurance does not cover the cost of repairing or replacing something; it is intended to protect against legal and financial risks.

The cost of indemnity insurance for planning permission can vary depending on the property value and the specific risks involved. It is typically a one-off payment that can range from a few pounds to several hundred pounds.

It covers issues with restrictive covenants

Indemnity insurance is a type of insurance that covers legal costs and potential damages in lawsuits. It is relevant when buying and selling a house when an indemnity insurance policy covers a legal defect with the property that either can’t be resolved or would be very costly and/or time-consuming to do so.

Restrictive covenants are binding conditions that are written into a property’s deeds or contract by a seller to determine what a homeowner can or cannot do with their house or land under particular circumstances. They can cover a wide range of issues, including preventing owners from making alterations to a property, preventing buildings or other substantial structures from being erected on a section of land, and preventing trades or businesses from operating on the land.

If you own a property and breach a restrictive covenant, you could be forced to undo any offending work, pay a fee, or even face legal action. This is where restrictive covenant indemnity insurance comes in. This type of insurance can be obtained by the property developer, building contractor, or homeowner to ensure that a development is protected. If the restriction is discovered, the insurance will cover any costs associated with negotiations or settlements with neighbours, allowing the build to proceed without incurring time or cost constraints.

The insurance will also cover any damages awarded against you by the courts, your legal defence costs, or the cost of a settlement. It will protect you from the costs of altering, demolishing, or rebuilding any part of the property, if construction has already begun. Additionally, it will protect you from a reduction in the market value of the land or the property.

The cost of restrictive covenant indemnity insurance typically ranges from £50 to £500, depending on the number of covenants breached and the perceived level of enforcement risk. It is usually the seller who is asked to arrange and pay for this type of insurance, but it is important for the buyer and seller to confirm who is responsible. The policy will last forever and will continue to cover the buyer, even if they sell the property, as well as future owners and occupants and their mortgage providers.

It covers chancel repair liability

Indemnity insurance is a type of insurance that covers legal costs and potential damages in lawsuits. It is often suggested by conveyancing solicitors when buying or selling a property. Indemnity insurance covers legal defects in a property that are either too costly or time-consuming to resolve.

Chancel repair liability is one of the reasons why someone might need indemnity insurance. This is a traditional financial liability that can be imposed on anyone in England or Wales who owns land within the boundaries of a parish church built before 1536. If you own a home or commercial property near a medieval church, you could be billed for repairs to the church's chancel—the area containing the altar and the choir.

Chancel repair liability is an archaic law that dates back to the reign of Henry VIII. During this time, after the dissolution of the monasteries, a large amount of property that had belonged to rectories came into lay ownership. As a result, the new landowners became responsible for repairs to the chancel, and this liability has continued even as the land has been divided and sold over the centuries.

While chancel repair liability may seem like a remote possibility, there have been several high-profile cases where homeowners have been ordered to pay significant sums for repairs. One such case involved a couple who had to pay £95,000 (plus interest) for repairs to a church on their farmland, eventually having to sell the farm to cover the costs. Another involved a couple who inherited a farmhouse and were ordered to pay over £100,000 in repairs, ultimately owing over £220,000 including fees.

To mitigate the risk of chancel repair liability, homeowners can purchase chancel repair liability insurance, also known as chancel indemnity insurance. This insurance covers the cost of repairs claimed by a parochial church council (PCC) and can be obtained from a specialist provider for a one-off payment. There are two types of chancel repair insurance:

• No Search Chancel Indemnity Insurance: This type of insurance is purchased when no search has been done to check for the risk of CRL. It is relatively cheap, usually costing around £20 upwards.
• Chancel Repair Insurance: This insurance is for properties that are known to carry CRL and is more expensive, typically costing £40 and upwards.

In conclusion, chancel repair liability is a potential issue for landowners and homeowners in England and Wales, and indemnity insurance can provide valuable protection against the financial burden of unexpected repair costs.

It covers absence of easement

House indemnity insurance is a type of insurance that covers legal costs and potential damages in lawsuits. When buying or selling a house, an indemnity insurance policy covers a legal defect with the property that either can't be resolved or would be costly and time-consuming to do so.

Absence of easement is a common reason for taking out a house indemnity insurance policy. An easement is the right to use an area of land that does not legally belong to the user, typically involving a right to travel along an accessway owned by one or more adjacent landowners. It can also relate to services, such as the passage of pipes or cables across neighbouring land. Absence of easement refers to the situation where there is no legal right of access to a property, either by vehicle or on foot. This can cause issues for property owners, particularly when trying to sell.

A house indemnity insurance policy can provide peace of mind for buyers in the case of absence of easement. It covers the financial cost of defending the continued use of existing access ways and services, as well as any damages or compensation arising from the absence of easement. This can be particularly important for developers constructing multiple properties on a single site, as the risks are higher.

The cost of an absence of easement indemnity insurance policy varies depending on the property. Insurers need to review the title documents of the property and surrounding properties, as well as whether the land accessing the property is unregistered. The policy typically requires confirmation in writing that the access and/or services have been regularly used for at least 12 months without objection or consent.

It is important to note that an absence of easement indemnity insurance policy does not cover situations where the insured interferes with another person's use of an access way or service, or where maintenance or repairs are needed. It also does not cover any restrictions linked to the Road Traffic Act 1988, which prohibits driving on bridleways, common land, and footpaths.

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