Indemnity insurance question

amandacat

My buyer’s solicitor has asked that I purchase indemnity insurance for the electrics. 
The situation is, we were asked if any changes to the electrics had been made since 2005 as is standard on the property information form. We had to say we didn’t know because we haven’t lived here since 2005 and also aren’t entirely sure if we have. May make me sound a bit dumb but I can remember having an extractor fan and electric shower replaced maybe 9 years ago but I have no idea if the tradesman just replaced the device or had to do anything to the electrics. I also have a suspicion the previous owners installed a socket for a tv in one of the bedrooms as it’s in an odd place very high on the wall. That’s completely my mistake as I accepted it when the said no changes to electrics had been made when I bought from them (you live and learn). 
I’ve accepted I need to buy this insurance but I’m wondering how this will be set up given I don’t know what or if any changes have been made. Can it just be a general one to cover the electrics? Thanks 

davidmcn

No, you don't "need to buy this insurance" at all. If your buyers for some reason want to get comfortable with the electrics, they can get somebody in to have a look at it.

amandacat

Thanks, the wording of the buyers solicitor is ‘unless your client (me) can confirm that no electrical work has not carried out since 2005 then an indemnity insurance policy is required at their own expense. 
I take it this isn’t strictly true then? 

Mickey666

‘Is required’ could just mean that’s what the buyer is asking for, perhaps on their solicitor’s advice.  I don’t think it means ‘is required’ in a legal sense.
I agree with Davidmcn. You’re not obliged to buy such insurance at all, it’s just part of the negotiation - they can ask, you can decide one way or the other.  I suppose there’s a risk that the buyer might then walk away, though that would suggest to me they are not particularly interested in the first place.

Frankly, if a buyer is so concerned about the electrics then why, with respect, would they take a seller’s word for any alterations in the first place?  Also, even if the seller hasn’t done anything to the electrics, what can be concluded from that?  Very little I’d say, because it says nothing about the state of the electrics when the seller bought the house in the first place.  The whole thing is ridiculous.  As Davidmcn says, if they want an electrical inspection let them pay for it.
Besides, what would an indemnity insurance policy actually indemnify against?

davidmcn

amandacat said:

Thanks, the wording of the buyers solicitor is ‘unless your client (me) can confirm that no electrical work has not carried out since 2005 then an indemnity insurance policy is required at their own expense. 
I take it this isn’t strictly true then? 

It may a true statement of their initial negotiation position i.e. of what the buyers require you to do in order to proceed with their purchase. It's not a statement about the law or even general practice.

Buyers will start by asking for everything under the sun, the solicitors haggle down to what is actually relevant/necessary. You take advice from your solicitor, not the buyers' solicitor.

AdrianC

amandacat said:

Thanks, the wording of the buyers solicitor is ‘unless your client (me) can confirm that no electrical work has not carried out since 2005 then an indemnity insurance policy is required at their own expense. 
I take it this isn’t strictly true then? 

It may very well be true that the buyer says they require it.
That's different to a legal requirement.

You have a straight choice - smile and pay the hundred quid or so, or disagree with their "requirement".

That puts the ball back in their court. They can then decide if the policy is REALLY required (and pay for it themselves), if it's all a bit overblown, or walk away from the purchase.

FWIW, the question is asking about whether there's any Building Regs notifiable work. If there was, and it wasn't signed off, then there's not a sausage the local authority can do about it. The indemnity will pay for the legal costs in the event the impossible happens. If they want to spend a few quid on the electrics, an EICR would be a far better bet.

amandacat

I have no issue paying for the indemnity so we can move forward with the sale. I was thinking that the insurance might want to cover a specific installation but it would need to just cover the electrics in general, as we can’t say what or if any have been changed. Part of me wishes I just said no to the electrical question but I didn’t want anything to come back and bite me in the future. 
I got a headache to be honest trying to answer all the pre contract enquires, I understand they have to do their due diligence but there was so many questions I just had to put ‘I do not know’ as they were so complex.