Indemnity insurance policy for buying a property
- Flickr: Moore House
An indemnity insurance policy for a property will cover the buyer, and all future homeowners, from legal defects in the title of the property. This can be anything from lack of building regulations on work carried out to land ownership defects. In some instances, indemnity insurance is a short cut around some common issues. For example, a FENSA certificate is required to sell a home if replacement windows were put in - if the owner does not have FENSA approval they will take out FENSA indemnity insurance, rather than taking the extra time to have their windows FENSA approved.
The main types of indemnity insurance policy types for property buyers are:
- Lack of Rights Indemnity Insurance - the property is accessed over private land (rather than a footpath or highway), or the property is served by services (such as drains or cables) which are on private land, or cross into private land.
- Adverse Possession Indemnity Insurance - the original owner of the property only has possessory title, meaning they did not have evidence to prove ownership of the land originally and the title for the land was only given as "possessory" (in which case the original owner of the land can come forward and enforce their right to ownership).
- Flying Freehold Indemnity Insurance - part of the property overhangs a neighbouring property.
- Lack of Planning Permission Indemnity Insurance - no planning permission was sought for building work carried out on the property which could lead to local authority enforcement in the future.
- Building Regulations Indemnity Insurance - building regulations were not carried out or obtained prior to the construction or undertaking of building work on a property, making the owner liable for local authority enforcement and all financial losses incurred (if indemnity insurance is not taken out).
- FENSA Certificate Indemnity Insurance - replacement windows were installed after April 2001 but a FENSA certificate was no obtained (which is required to sell a home). Indemnity insurance, in this case, acts as a quick and cheap alternative to obtaining a FENSA certificate.
When making a purchase your solicitor will make you aware of any indemnity insurance policy for the property which may be beneficial or required. The homeowner may take out the policy themselves but, in the event you do have to take out a policy before purchasing a home, you should expect to pay a one-off fee for all types of indemnity insurance for anything from £20 to £700.