Indemnity Insurance Question

Scrabbles

Hi there,

I am first time buyer. I am in the process of purchasing the house and it has come to light the seller does not have the necessary paperwork relating to the planning permission, building regulations, fensa certificate for window etc for the changes made to the property.

I have decided I still want to go ahead with the property regardless and I am well aware of the disadvantages of this decision.

Nevertheless, the seller has agreed to pay for indemnity insurance but I am concerned with the terms of the policy. Is there even any point to having the policy?

The mortgage survey went in to detail regarding the chimney breast removal, conversion of the attic not being to the right standard etc

In the terms and conditions, it state:

What is the type of insurance and cover provided
under this policy?
This Lack of Planning and Building Regulations Consent
Indemnity provides cover where works have previously
been completed at the property without evidence of
planning and/or building regulations consent and the local
authority issues an enforcement notice.
It is designed to ensure you are indemnified against loss
arising from a claim under the policy, subject to the policy
terms and conditions.
Are there any significant conditions or exclusions
under this policy?
Full details of conditions and exclusions are detailed in the
policy, but we would draw your attention to the following:
Full details of conditions and exclusions are detailed in the
policy, but we would draw your attention to the following:
1. You must not enter into negotiation with the local
authority or apply for retrospective consent.
2. Claims are excluded:
a. arising from or relating to additional works carried out
to the property after the policy commencement date
b. where you communicate with the local authority after
the policy commencement date without the consent of
the Underwriters
c. for any works or use where consent was refused by
the local authority prior to the policy commencement
date.
d. where structural defects are identified in any survey,
home buyers report or mortgage valuation survey.
e. where the property is a flat formed following subdivision
or conversion works.

I am concerned with (d):

"where structural defects are identified in any survey,
home buyers report or mortgage valuation survey."

I just feel this defeats the object of having indemnity policy even in place or am I completely wrong in thinking this?

Any views on this?

Thanks in anticipation x

eddddy

This is a big topic, but just a couple of points:

Regarding (d)... If a defect is identified in the survey (e.g. the chimney breast is cracking/falling down), you can't then take out an insurance policy and expect the insurance co to pay for repairs.

So the policy is for properties without defects - but where the property doesn't have planning consent / building regs sign off.

(Many people would argue that in many circumstances, indemnity Insurance is pointless - put many mortgage lenders insist on it.)

davidmcn

Scrabbles wrote: »

I am concerned with (d):

"where structural defects are identified in any survey,
home buyers report or mortgage valuation survey."

I just feel this defeats the object of having indemnity policy even in place or am I completely wrong in thinking this?

Nobody's going to insure you against structural defects which have already been identified, and anyway the insurance isn't to cover that risk It's to protect you (and your lender) against the risk of the council taking enforcement action because of the lack of statutory consents.And its main value is that you won't get your mortgage without it. Plus it's useful to already have it in place when you come to sell or remortgage and somebody asks the same questions.

G_M

There is little point to these indemnity policies other than to satisfy mortgage lenders who often insist on them.

The insurance will cover you against enforcement by the council in relation to planning permmission and Building regs.

So if the council happens to visit, and say "oh - we notice you have an extension at the rear - you'll have to knock it down as you don't have PP" or "We see you have removed a chimney breast in your living room without Building Regs. You have to now replace it, or add a supporting beam" then yes, the policy will pay out.

Likely? Hardly! Especially as

Under s171B of the Town and Country Planning Act 1990, the local authority can only take enforcement action within four years of completion of any work which has been carried out without permission.

and

Under s36 of the Building Act 1984 the local authority must serve the notice within 12 months of completion of the work or else it is time-barred.

The insurance will NOT cover any defects in the work. If the chimney collapses, tough!

Annie1960

A lack of appropriate paperwork for planning consent and building regs is one of the reasons why property sales fall through.

If you are happy to buy the house without the consent then you may wish to ensure you get a full building survey to make sure the structure is safe before you buy.

gilpill

dose anyone know if i still need a FENSA certificate even if the 10 year gaurentee is up? when selling property

Pookie85

I can share some wisdom here, having just been in a similar situation. We eneded up pulling out because of a number of serious defects.

An unsupported chimney stack / remaining structure after breast removal is no joke. We were quoted around £1700 to put in beams and make it safe. This wasn't the only thing which put us off, but it's not something you should take lightly.

Regarding indemnity insurance, you might as well stick the money on roulette.

G_M

Pookie85 wrote: »

Regarding indemnity insurance, you might as well stick the money on roulette.

No.

With roulette you actually have a chance of winning.....

Hoploz

I'm a bit confused here ...

Just how much detail did your survey give? Am wondering whether the policy is already invalidated?