Household Indemnity Insurance: What It is and Why You Need It

Household indemnity insurance protects homeowners in the event there is a problem with various issues related to your home. For example, if you house has adequate planning permission for any additions or if there is a restrictive covenant that might have been breached.

It's unusual for a homeowner to purchase household indemnity insurance without being asked to by a propspective homebuyer. Typically the request comes when you are trying to sell your house. Perhaps you added on a sunroom to the back of the house, or added a deck. If your house had a restrictive covenant that you were unaware of -- specifying, for example, that you must obtain permission from the original builder before doing any additions -- then you may find yourself with a problem when the prospective buyer's conveyancer reviews the property.

If this type of problem is discovered, a homeowner has two choices: rectify the problem before sale, or purchase household indemnity insurance. The household indemnity insurance does not solve the problem, but it protects the new owner against the -- relatively remote -- possibility that a third party might try to enforce the covenant.

If a prospective buyer requests you purchase household indemnity insurance, first consult with your conveyancer, who is experienced in these matters. If it's determined the insurance is necessary and is the best approach, your next step is to get quotes. A wide variety of insurances companies provide these types of insurance policy, and the cost varies depending on the particular issue with the house. If your situation is especially unique, the company may even build a specific policy to cover it.

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