Indemnity Insurance for Build Over Sewer

Singa_V

We are selling our house and it turns out that the previous owners build a conservatory over a sewer which was not picked up by our surveyor or solicitor at time of purchase. The prospective buyers of our house now have raised this as an issue and want an indemnity insurance. They have used the purchase price plus a 10% year on year increase as the insurance value. Is this correct? If anything needs repairing on the sewer pipe then only the conservatory would be affected so I would have thought that the insurance value should only be around £10-20k?
Can someone advise please? Thank you

user1977

Pretty normal for indemnity policies to be for the total value of the property rather than trying to calculate what exactly would be done - in practice it's going to make hardly any difference as the premiums are tiny anyway (reflecting both the very small likelihood of a claim being made at all, and that it probably wouldn't involve the whole property becoming valueless).

Singa_V

Thanks User1977. The premium is £500 which is quite chunky or is this considered tiny? I read online that indemnity insurances tend to be around £30-300 so this was much more than we expected. 

user1977

Singa_V said:

The premium is £500 which is quite chunky or is this considered tiny? I read online that indemnity insurances tend to be around £30-300 so this was much more than we expected. 

That does seem unusually high. What's your solicitor's advice?

Singa_V

I'll need to check with him in more detail. I wanted to really get some alternative quotes to gage whether this is a high premium or not but needed to know what is standard practice. Thanks for the info!

themainman84

depends on value of the house. Around 300 is about right for a 400k house

Doozergirl

When was the house built? 

When was the conservatory built? 

Let's establish the the BOA was actually
needed first.  

Singa_V

doozergirl - house built in 1936 with combined sewer for the neighbouring houses. conservatory built in 2000. from what I understand from my neighbours who have lived here longer is that the sewer was at the time already public. There are man holes on either side of the conservatory so access is given. 

the mainman84 - the house value is ca £600k but I still think taking up insurance for the full house value is over-insuring it given that only the conservatory needs to be taken down in the event the water company needs to repair the pipes. there is no way the insurance company would ever have to pay out any more than ca £20k for the tear down and rebuild, maybe 25k tops to include cost to the sewer repair if this was caused by the weight which I think is highly unlikely given there have been no issues in the last 20 years). The conservatory is actually not even worth that value as it is in very poor condition (all windows blown and a brittle plastic roof) ,so more like a lean to really

Section62

Singa_V said:

the mainman84 - the house value is ca £600k but I still think taking up insurance for the full house value is over-insuring it given that only the conservatory needs to be taken down in the event the water company needs to repair the pipes. there is no way the insurance company would ever have to pay out any more than ca £20k for the tear down and rebuild, maybe 25k tops to include cost to the sewer repair if this was caused by the weight which I think is highly unlikely given there have been no issues in the last 20 years). The conservatory is actually not even worth that value as it is in very poor condition (all windows blown and a brittle plastic roof) ,so more like a lean to really

I don't know the details of the policy you are looking at, but if it covers the cost of consequential losses to the water company the bill could end up far far more than that.

For example, if the sewer becomes blocked or collapses and the conservatory prevents timely access for a repair, and that leads to a neighbouring property being flooded with foul sewage, then the cost of cleaning up and renovating that other property (or properties) could get into 6-figures.

And even if flooding is prevented by (say) over pumping, the cost of mobilisation and/or hire of pumps (for example) can be a five-figure sum.

Clearly this is subject to whether or not the indemnity policy would cover consequential losses of this nature - and if it doesn't, then as a buyer I wouldn't accept it as adequately protecting me.

No issues in the last 20 years isn't a guide to what might happen in the future. Have the pipes had a CCTV survey recently?


The pricing of these policies seems to be done not on the basis of actual risk in each case, but pooling the risk/costs at the macro level.  You might be able to find an insurer who would price on the basis of actual underwriting risk for your property... but I'm not sure that would work out any cheaper than an off-the-shelf bog standard one, given the nature of the business.

Singa_V

thanks Section62 - no CCTV done. Good points about consequential losses. I didn't even think of that. 

I'm really glad I posted here. It's our first time selling a house and we are incredibly out of our depth. The solicitor hasn't been too forthcoming on the ins and outs of this topic either so all your answers are really helpful!

Irishpearce26

Singa_V said:

doozergirl - house built in 1936 with combined sewer for the neighbouring houses. conservatory built in 2000. from what I understand from my neighbours who have lived here longer is that the sewer was at the time already public. There are man holes on either side of the conservatory so access is given. 

the mainman84 - the house value is ca £600k but I still think taking up insurance for the full house value is over-insuring it given that only the conservatory needs to be taken down in the event the water company needs to repair the pipes. there is no way the insurance company would ever have to pay out any more than ca £20k for the tear down and rebuild, maybe 25k tops to include cost to the sewer repair if this was caused by the weight which I think is highly unlikely given there have been no issues in the last 20 years). The conservatory is actually not even worth that value as it is in very poor condition (all windows blown and a brittle plastic roof) ,so more like a lean to really

BOAs came into force in 2011, sounds like no BOA was needed. Check the sewage/water provider website for detail. I had this on my last house sale and was able to provide an extract from severn trent that stated any extension before 2011 did not require a BOA as long as building regs was done.