Restrictive covenant Indemnity Insurance

Giggidy

Following on from my previous post, I have spoken to our solicitor regarding obtaining indemnity insurance for a restrictive covenant on the propery we are hoping to purchase, which states no trade or business shall be done in the property. Looking at the title registers for both neighbouring properties, they are beneficiaries of the same covenant.

The solicitor advised that it also states building schemes were excluded, but could still be enforced if the neighbours land is annexed to ours, which is unlikely but there are no guarantees. Way over my head. 

I just want to know, can we get an indemnity should either neighbour in the unlikely event take legal action against me running my business from home. This is not a disruptive business, and they would only really know about it when I get one or two deliveries on a pallet or van, and collections from Royal Mail, every few months. Probably wouldnt be an issue for them as no traffic or noise, or day to day disruptions, plenty of parking in the road, even with a big truck delivering, only would be a matter of minutes. But we could still find ourselves living next to someone who takes issue with that.

Our solicitor has now suggested that he can discuss this with a specialist insurer as they don't tend to offer indemnity insurance for sellers or buyers unless there was already a breach. From what I read, the seller could get the insurance to protect the buyer, a one off cost that isn't very much. If I could possibly ask them instead, and maybe go halves on it, rather than paying the solicitor an additional fee to set this up and pay for the insurance on top of that. Is this possible?

j2009

I doubt you find an insurer to take on that risk because it's unclear what they are covering ie if you receive a complaint must they pay for alternate premises, if so how long and at what cost? Or must they pay lost earnings because you have to wind up the company? Remember, you have a duty of care and insurers therefore rely on you acting in a manner that will minimise loss; so buying insurance to protect against something deliberate that you intend do that and know is against rules doesn't sound insurable.

Just for completeness as I know you said you can't get it, but Indemnity insurance is different because as per your original post, the breach needs to have already occurred and you're protecting yourself against a mistake someone else made

All that said, it doesn't sound like a disruptive business and pallet deliveries aren't a big deal and are domestic too so you won't have a problem - I'd move in and not worry. There are much worse things neighbours can do!

RAS

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Based on earlier thread, these are imported cosmetics sold on by mail order.

user1977

What do you want the insurance to do?

As said, indemnity insurance is generally against existing breaches i.e. things which have been tried and tested and don't appear to have provoked the neighbours etc into action so far. I haven't come across insurance against breaches you're planning to start.

The insurance would cover defending any action, and ultimately pay any loss in value of the property if you lose a court action (usually up to the value of the property) - though in this case, it's doubtful there would be a material, objective loss in value as house prices don't usually include an uplift for being used as business premises. You can also get additional cover though for businesses to cover loss in profit while they are shut down and the cost of finding alternative premises.

You might have more general legal cover for your business which would at least pay for advice and representation against a claim (though not ultimately the costs of losing a claim).

And/or you could just bear the risk as being one of the extremely remote ones - what's the likelihood of a neighbour being so irked by your business that they go through the hassle of cost of going to court about it?