Legal Indemnity Insurance
Legal indemnity insurance (LII) can be purchased to offer protection to a buyer (and a lender) of residential and commercial properties where there is a defect in the title which cannot be resolved.
LII is used in property conveyancing transactions where there is a legal defect (a missing landlord, lack of planning permission or building regulations approval, a lack of a right of way etc.) which cannot be quickly resolved, or in some cases cannot be resolved at all and which is reasonably unlikely to cause any actual loss but does have the potential to cause a significant loss
In practice, LII can provide a quick and low cost alternative to the work required to correct a defect. The premium for a LII indemnity policy is paid only once and the cover is usually automatically transferred to successors in title and lasts for the life of the property, or the policy period, perhaps tied to a loan or lease. LII is also a means of getting a transaction to the point of completion more quickly than resolving the defect itself.
When purchasing LII, it’s important to understand that:
- The cover doesn't fix the insured defect, but offers financial compensation.
- It's a condition of the policy that the existence of the policy isn't revealed to a third party.
So what does LII provide cover for?
- Defective Titles including Good Leasehold Title, Lost Title Deeds, Adverse Possession, Outstanding Rights and Easements
- Restrictive Covenants
- Chancel Repair Liability
- Defective Lease including Contingent Buildings Insurance, Absentee Landlord and Maisonette (incorporating seven of the most Common Defects)
- Flying and/or Creeping Freehold
- Insolvency Act
- Lack of Planning Permission and/or Lack of Building Regulation Consent
- Access and/or Services
- Searches including cover for Search Delay, Search Validation, No Search and No Search-mortgagee only
- Contaminated Land – expenses incurred in treating, isolating or removing any substance from the Policyholder’s land in accordance with the requirements of any Statutory Notice
How much does LII cost?
The premium will depend on the value of the property and also vary depending on the risks that are to be insured.
How is the cover arranged?
If you're dealing with your own conveyancing, you should talk to a broker specialising in arranging LII cover.
Alternatively, you might ask the seller/buyer to arrange the cover and agree to add the premium to, or deduct it from, the purchase price. In this case the solicitor can arrange this through an insurance broker/insurer.
Artemis Insurance Brokers has over 25 years’ experience in arranging LII, so you can trust us to find the right cover from our panel of specialist insurers. With this experience, we're able to simplify the insurance buying process and issue quotations and policy documents with the minimum of fuss. We'll also highlight what actions might invalidate the cover.
Give us a call today on 020 8619 5000 to discuss your legal indemnity insurance requirements.
