Anyone ever had to claim on an indemnity policy?

sideplate

Has anyone any experience of needing to claim on an indemnity policy? I hear various reports as to whether they're 'worth the paper they're written on'.

Thanks,

silvercar

One of the reasons they are deemed worthless is they cover events that are so unlikely to happen that they won't be needed, rather than claims being rejected.

Doozergirl

What silvercar said. It won't be claims experience, it's the fact that they'll probably never claim on them.

Will be interesting to see if anyone replies that has had to claim. In over five years on this board I think it's about the only supposed eventuality I haven't read about.

timmyt

silvercar wrote: »

One of the reasons they are deemed worthless is they cover events that are so unlikely to happen that they won't be needed, rather than claims being rejected.

the policies are the best things insurance companies can make available. they cover the specific risk you are insuring against.

lawyers use them all the time - and no we don't get commision, as they are so cheap.

however, the point is that the risks you insure against used to waived off as so unlikley by educated and expereinced conveyancing solicitors

then came along the factory conveyancers where the employees are thick and unqualified and didn't have the wit/expereince to take an educated view. What to do?...insurance products came out...dirt cheap to make them attractive and so more and more conveyancers have adopted them.....as it is easier to take them out than argue with a dumb conveyancer

they bring speed and low cost to an issue that would otherwise stump half the conveyancers out there...better that than slow down deals.

the sooner internet conveyancers and 'northern' factory firms are shut down the better for conveyancing in general.

but the posters and readers on this website won't be told and so 'cheap' will remain king and crap conveyancers you will get for your low price

Bananamana

Dealt with one a few years ago and they can be a bit of a pain - but it is quite rare people claim on them

Obviously have a good read of the policy (check the underwriting criteria were/are met, that the risk you are concerned about is noted under whats covered and check the remedies under the heads of loss).

If in doubt speak to your solicitor who put the policy in place or is considering putting it in place.

Also it really depends on the type of policy

<sebb>

I think others have hit the nail on the head here. They cover a risk that is so unlikely to actually happen that there are very few legitimate claims being made. The problem with them is that some solicitors will recommend a policy but not explain what it is actually for or what the restrictions on it are. So often people are told "don't worry, there aren't any building regs for that extension, I'll get you an indemnity" and the buyer thinks they are covered for everything. So the next thing they do is decide to alter the extension, get the council in to look at the proposed work and low and behold they have voided the policy. Next thing they find is the extension is unsafe and they are liable to fix it.

I've heard a solicitor on here say that indemnity policies are pretty much just a quick and cheap way of of keeping the lender satisfied because they won't touch it without the policy.

IMO, indemnity policies (which aren't explained properly to a buyer) actually do more harm than good as some buyers will think they are covered for substandard works when they are not.

Bananamana

Taking a practical example

Seller has an extension built at the property in say 2004. Planning permission was obtained but building regulation approval/consent was not.

The policies only ever cover remedies against enforcement action taken by the council and not problems with the work. Subject to some exceptions the enforcement period is usually 1 year- the biggest exception being if there is a health and safety issue. I can pretty much guarantee the underwriting criteria will be that the works were done over a year ago.

If the work is unsafe the council bringing enforcement action is probably not going to be your biggest worry. Which is why they can be seen as a waste of money.

Hope that makes sense ^^

vet8

What I find odd about these is that lots of posters on here say that if you inform the council about the extension or whatever the indemnity insurance policy is then invalid. I just think it is strange that these policies only work when you are being underhand and secretive and as soon as you make an honest and open enquiry about the work done to the house you are shafted.

timmyt

the policies work a treat, all of you need to understand the point of them and you all clearly do not.

they cover loss in value should whatever the risk insured against occur. not rocket science. that is insurance

the Buyer is demanding them, so the policy is offered.

e.g

- covenant against bulding - if objector comes along, the policy will buy them off or pay the loss in value of the home -
result.
- lack of building reg consent - the surey says the work is fine, so no issue. But if the COuncil enforce (which they won't...but try telling a cheap and nasty conveyancer that who has no IQ) it covers cost of the work. For £30 it gets the stupid lawyer off your back. result
- lack of access to your property - if objector comes along, the policy will buy them off or pay the loss in value of the home -
result.

oh the list goes on

Richard_Webster

Acted for client buying long leasehold house with £2 a year ground rent. Lease said freeholder's consent required for extensions. Manky lean to conservatory/porch effort at back - in northern city where post is delivered to back doors of 4 houses by walking down ginnel under the middle two.

Seller' solicitor couldn't produce consent for extension from freeholder but was persuaded to get a leasehold covenant policy (not as straightforward to get as some other such policies). Soon after completion client gets circular letter from freeholder (rip-off company part of a group well known in legal circles) asking for 3 years arrears of ground rent (£6) and also asking if any extensions had been carried out. (If anyone was silly enough to admit this there would have been a heavy demand for admin and surveyor's fees etc for considering whether to give retrospective consent.)

I contacted insurer under policy to find out what they wanted done and suggested simply paying ground rent and ignoring letter. They agreed and client did that and I have heard no more about it.

So that's the nearest I 've got to making a claim on an indemnity policy.

Suzy_M

Doozergirl wrote: »

What silvercar said. It won't be claims experience, it's the fact that they'll probably never claim on them.

Will be interesting to see if anyone replies that has had to claim. In over five years on this board I think it's about the only supposed eventuality I haven't read about.

Anyone else think the next types of indemnity policy available will be

- one to cover the eventuality of a previous indemnity policy not providing the correct or adequate cover

or

- one to cover mis-selling of indemnity policies.

:rotfl: