In brief, an Indemnity Policy is a specific type of insurance policy that claims to cover for costs that might be incurred as a result of missing documents that are required during a property transaction.
This could typically be for an absence of Listed Building Consent, Planning Permission or Building Regulation Consent. They tend to be suggested by legal advisors during the conveyancing process before exchange of contracts.
I did some research into these policies several years ago. At that time, and it may be different now, there were two companies in Norwich who offered these policies. They were actually the same company, trading under two different names. The policies were identical, word for word, although used a different font and heading.
Are they of any value though..?
The answer to this question is both yes and no.
Yes, the policy has a value of some kind if it allows a property to be bought/sold. If it is a case of being able to buy/sell it with the policy, or unable to without the policy then that is itself a value. The lawyer has a duty of care to the mortgage lender and part of that conveyance process is to provide assurance that there are no undue liabilities. Lack of Consents and Permissions would be an undue liability. Therefore, by ticking a box on the conveyance protocol to say that an insurance policy is in place would suffice. In practice, it means nothing though.
No, the policy is unlikely to have any real value at all should you need to make a claim on it. It should not be considered as something like a warranty on your washing machine. The exclusions and clauses that would void the policy are so well written, for the protection of the insurance company, that it is highly unlikely that anyone would be able to make a successful claim and receive a pay-out. For example, simply knowing about the presence of an unauthorised alteration to a Listed Building could be sufficient to void the policy. Having had any contact at all with the local authority can void the policy. There are other typical actions that a reasonable person might do which will void the policy.
The clue is in the premium paid for the Indemnity Policy. They are not expensive. This is because the insurers are confident that they won’t need to pay out on any claims.
Disclaimer: Anything posted in this Blog is for general information only and it is not in any way intended to provide any advice, legal or otherwise, on any general or specific matter that you can rely on. You should always seek your own legal advice.