Indemnity Insurance

CRISPIANNE3

We recently bought a grade 2 cottage with a flying freehold and because the neighbouring property had a small stair case over our cupboard we were advised to take out Indemity insurance.  This was paid for by the seller. However the neighbouring property is also a grade 2 property and we have now found out it is being used as offices.  However it states on the policy that it is assumed the property adjacent is not business premises. We are now worried where we stand and what to do. Any help appreciated.

Ditzy_Mitzy

Was the neighbouring house being used as offices prior to sale?  Either way you are likely to be underinsured, if not uninsured, so your first port of call should be the insurance company.  They may be able to amend the policy for a nominal fee, which will remedy matters, but there may also be an additional premium to pay - there may not, conversely, it all depends on the assessment of risk.  

You note that you* took the policy out and invoiced the seller in respect of it.  Morally speaking, the mistake is on your part and the seller ought not be pursued for additional administrative costs incurred.  You might try asking them for any additional premium, however, on the basis that the agreement was - one assumes - to purchase adequate indemnity insurance for the premises.  Be prepared to compromise.  

*you personally or a solicitor or agent?  

eddddy

Perhaps be a bit careful with this - if you have a mortgage.

Presumably, your solicitor arranged this indemnity insurance because it was a condition of your mortgage. If you tell your solicitor the policy is void, and your solicitor is unable to find a policy that would provide cover with a business premises next door - your solicitor might be required to tell your mortgage lender that you're breaching your mortgage conditions. (As your solicitor probably acted for your mortgage lender.)

Maybe you want to take a view on how important indemnity cover is. How big is the cupboard in question? If, for example, in the very worst case, the neighbouring house 'fell down' or 'burnt down'; the owners refused to rebuild the neighbouring house;  and so you lost that cupboard space - would that be a serious issue?

CRISPIANNE3

Ditzy_Mitzy said:

Was the neighbouring house being used as offices prior to sale?  Either way you are likely to be underinsured, if not uninsured, so your first port of call should be the insurance company.  They may be able to amend the policy for a nominal fee, which will remedy matters, but there may also be an additional premium to pay - there may not, conversely, it all depends on the assessment of risk.  

You note that you* took the policy out and invoiced the seller in respect of it.  Morally speaking, the mistake is on your part and the seller ought not be pursued for additional administrative costs incurred.  You might try asking them for any additional premium, however, on the basis that the agreement was - one assumes - to purchase adequate indemnity insurance for the premises.  Be prepared to compromise.  

*you personally or a solicitor or agent?  

eddddy said:

Perhaps be a bit careful with this - if you have a mortgage.

Presumably, your solicitor arranged this indemnity insurance because it was a condition of your mortgage. If you tell your solicitor the policy is void, and your solicitor is unable to find a policy that would provide cover with a business premises next door - your solicitor might be required to tell your mortgage lender that you're breaching your mortgage conditions. (As your solicitor probably acted for your mortgage lender.)

Maybe you want to take a view on how important indemnity cover is. How big is the cupboard in question? If, for example, in the very worst case, the neighbouring house 'fell down' or 'burnt down'; the owners refused to rebuild the neighbouring house;  and so you lost that cupboard space - would that be a serious issue?

Thank you both for taking the time to reply. I have now spoken to my solicitor and they have in turn spoken to the company who arranged the insurance and the main thing is providing the  insured is a single residential dwelling house there would be no issues.

Also no mortgage company is involved as we paid cash for the property.