Insurance Indemnity Policies - Are they Really Necessary?

EssexHebridean

So, when you had the garage built, did you do your due diligence and check on the requirements for planning permission? Or did you just go with what the builder told you? If the latter, then I can see why the buyer would be advised to insist on the indemnity policy!

There is no “extra charge” for a freehold property. They do however have many advantages, so people often prefer them. As said before though, freehold doesn’t mean you can just do whatever you like. 

Bigphil1474

OP, you are confusing matters. Planning permission and building regs is all to do with legal requirements of the day. What you are talking about is covenants on the house. We have an indemnity policy on the house we bought as the people we bought it off were supposed to ask permission of the original builders of the estate before putting on an extension. Bear in mind the house was built in the early 60's, the extension went up in 2015, and the builders no longer exist in their original format, it seemed a bit of a waste of time, but hey ho. Think the sellers paid £86 for that policy, we paid £35 for a policy in case the church starting chasing us for money as they used to own the land 200 years ago and were entitled to some money off all land owners, or something equally daft. Given we were spending hundreds of thousands, it didn't seem worth arguing over it.

TBG01

Mutton_Geoff said:

I'm convinced these policies will become the subject of a future mis-selling scandal.

Based on what exactly?

It's a one of premium that costs next to nothing and highly unlikely to be ever claimed on.

Yes (ignoring it being a lender requirement) there's an argument for getting them if theyre unlikely to be claimed on, however, the same folk that jump up and down over having to get a policy, would be the same folk jumping up and down if they were negatively impacted by not getting a policy.

Leodogger

I challenged our solicitor about paying for the Insurance Indemnity for the building of the garage as it fell within legal guidelines on size and spec. etc. and didn't need planning permission, so she withdrew that part of the Insurance policy cover but then dropped the bombshell of us having to pay £125 for an insurance indemnity because we didn't get permission from the original builder who had a covenant on the property that we were never told about when we purchased the property (I did read somewhere that if the builder was dead they couldn't enforce the covenant, but the solicitor said he was still alive).   When I challenged her to apply to him to remove the covenant, she said it would take months to get it done and the sale of our property would fall through, all for the £125 the insurance company wanted to charge for the insurance indemnity policy.   When I asked her if she had got quotes from other companies before putting forward this one company's policy, she said they only use one company😮   So as I said to her, it comes down to us paying up and shutting up or losing the sale and she said generally speaking, yes !!    As I pointed out at the end of our conversation, seems to me that buying a freehold property offers you no protection at all to do what you like with your own property when this sort of thing can happen and she agreed !   So that old saying still applies Emptor Cave or  "Buyer Beware" !

Linton

I think you have missed the point of these indemnities.  They are not inteneded to provide some recompense in the future for events that probably will never happen but rather to get an agreement that is faster and cheaper than having solicitors arguing for weeks.

Leodogger

Linton said:

I think you have missed the point of these indemnities.  They are not inteneded to provide some recompense in the future for events that probably will never happen but rather to get an agreement that is faster and cheaper than having solicitors arguing for weeks.

You mean notwithstanding the fact that the solicitors obtaining these policies are probably getting back handers from the insurance company to place the business with them since they only use ONE company our solicitor told us and no doubt I will be billed for the solicitor's admin in sorting them out on our conveyancing bill !

EssexHebridean

Leodogger said:

I challenged our solicitor about paying for the Insurance Indemnity for the building of the garage as it fell within legal guidelines on size and spec. etc. and didn't need planning permission, so she withdrew that part of the Insurance policy cover but then dropped the bombshell of us having to pay £125 for an insurance indemnity because we didn't get permission from the original builder who had a covenant on the property that we were never told about when we purchased the property (I did read somewhere that if the builder was dead they couldn't enforce the covenant, but the solicitor said he was still alive).   When I challenged her to apply to him to remove the covenant, she said it would take months to get it done and the sale of our property would fall through, all for the £125 the insurance company wanted to charge for the insurance indemnity policy.   When I asked her if she had got quotes from other companies before putting forward this one company's policy, she said they only use one company😮   So as I said to her, it comes down to us paying up and shutting up or losing the sale and she said generally speaking, yes !!    As I pointed out at the end of our conversation, seems to me that buying a freehold property offers you no protection at all to do what you like with your own property when this sort of thing can happen and she agreed !   So that old saying still applies Emptor Cave or  "Buyer Beware" !

My BiB: It has already been explained to you that Freehold does not = "a right to do whatever you like with your property, and hang anyone else". Had you checked your deeds prior to going ahead and having the garage built, you would already have been aware of the requirement to gain consent and could have obtained it prior to going ahead. That you failed to carry out that step of due diligence isn't really anyone else's fault, is it. 

Your old saying by the way is Caveat Emptor. 

Leodogger said:

Linton said:

I think you have missed the point of these indemnities.  They are not inteneded to provide some recompense in the future for events that probably will never happen but rather to get an agreement that is faster and cheaper than having solicitors arguing for weeks.

You mean notwithstanding the fact that the solicitors obtaining these policies are probably getting back handers from the insurance company to place the business with them since they only use ONE company our solicitor told us and no doubt I will be billed for the solicitor's admin in sorting them out on our conveyancing bill !

That is an incredibly serious accusation. It's also a ridiculous one. 
It was also explained to you previously that as a rule indemnity policies are charged at cost - obtaining of them in the normal way is part of a standard fee for conveyancing.

Using just one firm for indemnities is pretty standard. I am sure that your solicitor would be happy to provide you with an extra/over hourly rate for shopping around in your particular instance however. You can probably expect it to take a couple of hours, all in, by the time you include researching to ensure that the firms being looked at for quotes are genuine, and you can also probably expect an hourly rate of £300 - £600 per hour, dependant on the experience level of your solicitor and factors relating to the type of firm they are in. Perhaps that would be a way forwards for you?

For context, the majority of the sorts of indemnity policies being discussed not only cover the purchaser but also their mortgage lender, and any subsequent purchaser too - ie, the policy gets passed on with the property. Not such a bad deal for a couple of £hundred, really. 

Leodogger

EssexHebridean said:

Leodogger said:

I challenged our solicitor about paying for the Insurance Indemnity for the building of the garage as it fell within legal guidelines on size and spec. etc. and didn't need planning permission, so she withdrew that part of the Insurance policy cover but then dropped the bombshell of us having to pay £125 for an insurance indemnity because we didn't get permission from the original builder who had a covenant on the property that we were never told about when we purchased the property (I did read somewhere that if the builder was dead they couldn't enforce the covenant, but the solicitor said he was still alive).   When I challenged her to apply to him to remove the covenant, she said it would take months to get it done and the sale of our property would fall through, all for the £125 the insurance company wanted to charge for the insurance indemnity policy.   When I asked her if she had got quotes from other companies before putting forward this one company's policy, she said they only use one company😮   So as I said to her, it comes down to us paying up and shutting up or losing the sale and she said generally speaking, yes !!    As I pointed out at the end of our conversation, seems to me that buying a freehold property offers you no protection at all to do what you like with your own property when this sort of thing can happen and she agreed !   So that old saying still applies Emptor Cave or  "Buyer Beware" !

My BiB: It has already been explained to you that Freehold does not = "a right to do whatever you like with your property, and hang anyone else". Had you checked your deeds prior to going ahead and having the garage built, you would already have been aware of the requirement to gain consent and could have obtained it prior to going ahead. That you failed to carry out that step of due diligence isn't really anyone else's fault, is it. 

Your old saying by the way is Caveat Emptor. 

Leodogger said:

Linton said:

I think you have missed the point of these indemnities.  They are not inteneded to provide some recompense in the future for events that probably will never happen but rather to get an agreement that is faster and cheaper than having solicitors arguing for weeks.

You mean notwithstanding the fact that the solicitors obtaining these policies are probably getting back handers from the insurance company to place the business with them since they only use ONE company our solicitor told us and no doubt I will be billed for the solicitor's admin in sorting them out on our conveyancing bill !

That is an incredibly serious accusation. It's also a ridiculous one. 
It was also explained to you previously that as a rule indemnity policies are charged at cost - obtaining of them in the normal way is part of a standard fee for conveyancing.

Using just one firm for indemnities is pretty standard. I am sure that your solicitor would be happy to provide you with an extra/over hourly rate for shopping around in your particular instance however. You can probably expect it to take a couple of hours, all in, by the time you include researching to ensure that the firms being looked at for quotes are genuine, and you can also probably expect an hourly rate of £300 - £600 per hour, dependant on the experience level of your solicitor and factors relating to the type of firm they are in. Perhaps that would be a way forwards for you?

For context, the majority of the sorts of indemnity policies being discussed not only cover the purchaser but also their mortgage lender, and any subsequent purchaser too - ie, the policy gets passed on with the property. Not such a bad deal for a couple of £hundred, really. 

I think you will also agree that these policies as you have stated are for the buyer's benefit and not the seller's!   You speak like a solicitor but when we bought the property as I have said previously we were NOT told about the covenant when we bought our property and as an owner of a property it is not unreasonable to presume that if you buy a property Freehold you would not expect to seek the approval of the original builder of 60 or more years ago to build on your own land, in fact if he was dead it would have been unenforceable.   After all I am NOT a solicitor so why would I know that automatically that I needed to consult our deeds, we have never had to do so before?   I am sure there are thousands like us who would be unaware, in fact I consulted my own family and none of them had heard of such a thing before.   Also this is our 6th property (we are in our 70s'!) we have bought and it has never been mentioned to us before in all those conveyancing of properties.   In fact Insurance Indemnity was never asked from us in any but the very first property which was for the uninsured portion of a mortgage as a first time buyer, so why would I have expected it to happen now in respect of home improvements?   We have improved properties before and never been asked for such a thing when we came to sell.   In any event, it is settled and we complete in 8 days time !  

By the way, I think I did rather support my argument that you have to question these insurance indemnities as when I challenged my solicitor that I did NOT need planning permssion from the council and I stated the legal conditions for not needing permission and for which she had already obtained insurance cover, she went back and got it removed, thereby rather confirming my assertion that solicitors are not always accurate in their "presumptions" which was all that was ! 

EssexHebridean

I'm not a solicitor. I do know though that you will have been provided with a copy of the title when you purchased, and asked for any comments or questions you had on that. You will also have been sent a copy of the title when it was registered into your name - and that is the document you should have checked prior to just going ahead with the garage.
As the owner of a freehold property it is not reasonable to assume you can do whatever you like with the property and the land it stands on - the world just doesn't work that way. 
Plenty of people who are not solicitors understand the need to consult the title documents before proceeding to build on the property - that doesn't require qualifications, just a small amount of knowledge.
Asking your own family who may also not have that knowledge is not really a sound way of working out what your obligations may be. 
If you have never been provided with copies of the title and asked for your comments thereon in 6 conveyancing transactions then that would be incredibly surprising. That you might have instructed one incompetent solicitor is possible, the idea that that you have apparently managed to instruct multiple incompetent solicitors is frankly astonishing. (Or would be if it were in fact the case - I suspect it is not!)  On each occasion when I have purchased a property, a copy of the title, along with information forms, searches etc was provided by my solicitor and we were asked to check these carefully and get back to them with any queries we might have relating to that. We did indeed check them, but many people do not - which can be to their detriment down the line! 

I'm afraid you didn't really support anything - or at least, not what you think you did. Your solicitor would have been asking you about planning permission because they had an enquiry from the other side relating to this. Solicitors are not experts in planning requirements - and so will have been simply passing on your answer on that to the buyer's solicitor. when your answer was receive by the other side they (or their lenders)  will have withdrawn the requirement for indemnity cover relating to that aspect. 

Congratulations on your impending move. It sounds like it is a little too late now to suggest that you go back over the documentation sent to you by your solicitor and ensure that you have read and understand it all. I would strongly suggest that assuming you have a new home you are moving to, you do check the title to that properly when you get it in order to fully understand what you can, and cannot, do with the place. It might save you a couple of hundred pounds for an indemnity policy along the line, after all. 

TBG01

Leodogger said:

EssexHebridean said:

Leodogger said:

I challenged our solicitor about paying for the Insurance Indemnity for the building of the garage as it fell within legal guidelines on size and spec. etc. and didn't need planning permission, so she withdrew that part of the Insurance policy cover but then dropped the bombshell of us having to pay £125 for an insurance indemnity because we didn't get permission from the original builder who had a covenant on the property that we were never told about when we purchased the property (I did read somewhere that if the builder was dead they couldn't enforce the covenant, but the solicitor said he was still alive).   When I challenged her to apply to him to remove the covenant, she said it would take months to get it done and the sale of our property would fall through, all for the £125 the insurance company wanted to charge for the insurance indemnity policy.   When I asked her if she had got quotes from other companies before putting forward this one company's policy, she said they only use one company😮   So as I said to her, it comes down to us paying up and shutting up or losing the sale and she said generally speaking, yes !!    As I pointed out at the end of our conversation, seems to me that buying a freehold property offers you no protection at all to do what you like with your own property when this sort of thing can happen and she agreed !   So that old saying still applies Emptor Cave or  "Buyer Beware" !

My BiB: It has already been explained to you that Freehold does not = "a right to do whatever you like with your property, and hang anyone else". Had you checked your deeds prior to going ahead and having the garage built, you would already have been aware of the requirement to gain consent and could have obtained it prior to going ahead. That you failed to carry out that step of due diligence isn't really anyone else's fault, is it. 

Your old saying by the way is Caveat Emptor. 

Leodogger said:

Linton said:

I think you have missed the point of these indemnities.  They are not inteneded to provide some recompense in the future for events that probably will never happen but rather to get an agreement that is faster and cheaper than having solicitors arguing for weeks.

You mean notwithstanding the fact that the solicitors obtaining these policies are probably getting back handers from the insurance company to place the business with them since they only use ONE company our solicitor told us and no doubt I will be billed for the solicitor's admin in sorting them out on our conveyancing bill !

That is an incredibly serious accusation. It's also a ridiculous one. 
It was also explained to you previously that as a rule indemnity policies are charged at cost - obtaining of them in the normal way is part of a standard fee for conveyancing.

Using just one firm for indemnities is pretty standard. I am sure that your solicitor would be happy to provide you with an extra/over hourly rate for shopping around in your particular instance however. You can probably expect it to take a couple of hours, all in, by the time you include researching to ensure that the firms being looked at for quotes are genuine, and you can also probably expect an hourly rate of £300 - £600 per hour, dependant on the experience level of your solicitor and factors relating to the type of firm they are in. Perhaps that would be a way forwards for you?

For context, the majority of the sorts of indemnity policies being discussed not only cover the purchaser but also their mortgage lender, and any subsequent purchaser too - ie, the policy gets passed on with the property. Not such a bad deal for a couple of £hundred, really. 

By the way, I think I did rather support my argument that you have to question these insurance indemnities as when I challenged my solicitor that I did NOT need planning permssion from the council and I stated the legal conditions for not needing permission and for which she had already obtained insurance cover, she went back and got it removed, thereby rather confirming my assertion that solicitors are not always accurate in their "presumptions" which was all that was ! 

How many more times does it need repated?

It wasn't planning permission you needed. It was covenant consent.

Covenant consent is completely different from what you're claiming "victory" over. 

Again it WASNT PLANNING PERMISSION YOU NEEDED. IT WAS COVENANT CONSENT.