Indemnity insurance...Whats/Who/Why..?

sujsuj

I am in the process to Buy/Sell house. Getting closer to search completion. My solicitor starts talking about 2 indemnity insurances. Looks like there are existing insurances on these areas.
1. Fact the water supply and services do not pass exactly where they should according to the plans. There is indemnity insurance in place but the value needs to be extended
2. Septic Tank ’ soak away’ is in neighboring land due to histric association (Land was part of this property 10 years ago) again  looks like previous owner taken indemnity insurance as well.

I am not fully aware of how Indemnity Insurances work..? My questions are..
1. Who benefits from indemnity insurance in above cases if I take them.? Solicitor? Me? Mortage Provider? All of them?  or Current Owner?
2. Is there a website where above indemnity insurances can be taken..? Or this can be bought from solicitors only..? Who should pay for these insurances? Me ? or My Seller?
3. Above 2 cases, for each Indemnity Insurance, what sort of costs are expected? <1K or 1K - 5K or above 5K? Cost is dependent of what?
4, Above cases how long I need to take these indemnity Insurances..? 1 Year now and extend every year ? or there is something called indefinite insurance for above cases?
5. For the case like septic tank is there a chance that 2-3K to replace it may be cheaper than taking a long term inemnity Insurance?
6. Indemnity Insurances are a must? without that solicitors will not complete conveyanceing? or is this a must for Lender?
7. is there a chance solicitors push for taking these Indemnity Insurances as they can make handsome money..? I didn't had any indemnity insurance need for last 2 houses

Basic queries, but someone will kind enough to explain this for me. thanks.

quotememiserable

1. The mortgage company benefits.
2. I imagine any one can buy them. As to who pays, that's up to you to agree. If the seller says 'you pay' you can either do it or walk away from the purchase.
3. These policies are cheap, because they are there to cover very unlikely events. £25 probably.
4. You pay once only.
5. Is it a septic tank or a soakaway? Two very different things, but either way, them being in someone else's ownership is highly problematic. I would not buy a house in these circumstances without the seller giving me solid reassurance that the arrangements are effective and long lasting
6. They optional, but if either the buyer or seller insist, they either get bought or the deal dies.
7. Solicitors make a few quid. Just an annoyance to them.

davidmcn

sujsuj said:

1. Who benefits from indemnity insurance in above cases if I take them.? Solicitor? Me? Mortage Provider? All of them?  or Current Owner?
2. Is there a website where above indemnity insurances can be taken..? Or this can be bought from solicitors only..? Who should pay for these insurances? Me ? or My Seller?
3. Above 2 cases, for each Indemnity Insurance, what sort of costs are expected? <1K or 1K - 5K or above 5K? Cost is dependent of what?
4, Above cases how long I need to take these indemnity Insurances..? 1 Year now and extend every year ? or there is something called indefinite insurance for above cases?
5. For the case like septic tank is there a chance that 2-3K to replace it may be cheaper than taking a long term inemnity Insurance?
6. Indemnity Insurances are a must? without that solicitors will not complete conveyanceing? or is this a must for Lender?
7. is there a chance solicitors push for taking these Indemnity Insurances as they can make handsome money..? I didn't had any indemnity insurance need for last 2 houses

Basic queries, but someone will kind enough to explain this for me. thanks.

1. You, your lender, and all the future purchasers and their lenders.

2. Generally they're sold to solicitors (the insurers don't want the hassle of advising/dealing with the public). Who pays is up for negotiation, but the usual principle is that the seller ought to be filling in the gaps where they're selling something which has defects in the paperwork. Though the seller may argue that the buyer is making too much of a fuss about a trivial matter they could take a view on.

3. Generally less than £1k for the vast majority of residential situations, sometimes less than £100.

4. Usually they're indefinite (or at least for long enough for the problem to have cured itself).

5. As above, probably not. Though you may of course have other reasons for replacing it, and it would avoid the marketability issues of a buyer walking away because they get twitchy about it.

6. Solicitor just advises, they don't insist. But your mortgage lender may need it even if you don't.

7. No "handsome money" to be made though they can charge for the time taken to sort it out. They also may be paranoid about future claims against them for e.g. failing to ensure that the mortgage lender was protected by a policy.

Alter_ego

The  indemnity insurance we took on purchase of our house protects us and subsequent buyers. Worth checking if your vendor's are the same.

davidmcn

Alter_ego said:

The  indemnity insurance we took on purchase of our house protects us and subsequent buyers. Worth checking if your vendor's are the same.

As above, entirely standard for the policy to cover future buyers. The solicitors will check anyway. Usual issue though is that the amount covered under the old policy might be insufficient, so a new or top-up policy might be needed.

sujsuj

Thanks for all the responses . 
-  Septic Tank is  completely inside my boundry, But Soak away is in the field behind. That area was part of this title until 10 years ago. Its unused grass land. Its highly unlikely its owner knows there is soakaway as  its not mentioned in any documents of this property, so I suppose same of that property as well.

Q1. I can see estimate of such indemnity goes from £25 to £1000, can there be more clarity on this..?
Q2. On indefinite Insurance covers subsequent buyers as well, what document is provided with new owner, I suppose their named will be added to the Insurance policy replaceing existing policy owners..?
Q3. Old policies are only 4 years old, so not much changes on the coverage value I think? In that case I suppose topup may not needed?
.Q4. I am also told One of previous extension (20 years ago) Building Regulations approval was obtained for this extension but it was not signed-off and a Completion Certificate has not been issued. May be Need indemnity for this as well..?

greatcrested

Well you need to be clear what the policy is protecting you against.

* the neighbour denying you use of his field for your septic tank's drainage fiel? You almost certainly have a precriptive right to use it by now - solicitor will explain

* failure of the drainage field (yes, they can fail, pipes get clogged up, soil gets water-logged), or non compliance with new rules? Very unlikely insurance will cover this. In that case, budget for a new treatment system. £5-15K.

Have you had the tank and field inspected? I'd be far more inclined to do that than wory about the (probably pointless)  insurance.

davidmcn

sujsuj said:

Q1. I can see estimate of such indemnity goes from £25 to £1000, can there be more clarity on this..?

Yes, you (or rather, the solicitor) give the insurers details of the risk you want covered and the amount of cover, and they then give you a quote for the premium.

Q2. On indefinite Insurance covers subsequent buyers as well, what document is provided with new owner, I suppose their named will be added to the Insurance policy replaceing existing policy owners..?

There's not normally any new document needed, the original policy says it covers future owners.

Q3. Old policies are only 4 years old, so not much changes on the coverage value I think? In that case I suppose topup may not needed?

Maybe, though typically you'd need cover to match the current value of the property (on the basis that in a worst case scenario, you'd got a house you can't use because e.g. it doesn't have any lawful means of drainage).

Q4. I am also told One of previous extension (20 years ago) Building Regulations approval was obtained for this extension but it was not signed-off and a Completion Certificate has not been issued. May be Need indemnity for this as well..?

I would regard it as pretty pointless if it's 20 years old, your solicitor's opinion may differ.

greatcrested

davidmcn said:

Q4. I am also told One of previous extension (20 years ago) Building Regulations approval was obtained for this extension but it was not signed-off and a Completion Certificate has not been issued. May be Need indemnity for this as well..?

I wouldn't regard it as pretty pointless if it's 20 years old, your solicitor's opinion may differ.

Is that a typo david?

davidmcn

greatcrested said:

davidmcn said:

Q4. I am also told One of previous extension (20 years ago) Building Regulations approval was obtained for this extension but it was not signed-off and a Completion Certificate has not been issued. May be Need indemnity for this as well..?

I wouldn't regard it as pretty pointless if it's 20 years old, your solicitor's opinion may differ.

Is that a typo david?

Ha! Well-spotted.