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Chancel Repair Liability Insurance

Marcus Simpson

07/11/2019

Chancel indemnity insurance is purchased during the conveyancing process by the buyer and protects them from any future claims to repair the local church.Chancel repair liability is a legal obligation on some property owners in England and Wales to pay for certain repairs to the local parish church. The historic right to impose these charges goes back many hundreds of years but came to prominence when a church won the right in the High Court in 2003 to impose a £100,000 charge on a landowner. This liability is not shown on the title deeds of the property at the Land Registry so the buyer and their solicitor wouldn't be aware that there is a liability to the local church until a claim was made. There are two types of Chancel Indemnity Insurance:

No Search Chancel Indemnity Insurance - taken out where the buyer is unaware if there is a chancel liability. This policy is void if the insurer can prove the buyer was aware there was a chancel liability.

Chancel Repair (known liability) Insurance - taken out where the buyer is aware if there is a chancel liability. The cost for this insurance is more than No Search Chancel Indemnity Insurance and can only be taken if there has been no:

attempt to cancel the chancel repair liability affecting the Property and/or
demands received or made and no enquiries exchanged with the church authorities relating to the chancel repair liability

The chancel indemnity isn't a search, it is an insurance policy that protects against the financial claim from the local church and pays for the costs if there is a liability due. When buying it is often seen as more cost effective to take out the chancel indemnity insurance without completing a chancel search and here is why. You can either:

Pay to search the chancel records using a chancel search at a cost ranging between £20 to £40 and then if there is a risk pay for the Chancel Indemnity Insurance of £40 upward.; or
Pay for No Search Chancel Indemnity Insurance for £20 without getting the chancel search. The indemnity insurance will pay out, subject to terms being met, any claim for repairs from the local church.

Parochial Church Council of the Parish of Aston Cantlow and Wilmcote with Billesley, Warwickshire v. Wallbank

The Wallbank case in 2003 brought the chancel repair liability issue to prominence. Andrew and Gail Wallbank received a demand for almost £100,000 to fund repairs of their ecclesiastical parish's medieval church at Aston Cantlow. After a protracted legal battle, as they sought to challenge this ruling, the Law Lords found in favour of the Parochial Church Council, leaving the Wallbanks with a £350,000 bill including legal costs. You can read more about the case here - Judgments - Parochial Church Council of the Parish of Aston Cantlow and Wilmcote with Billesley, Warwickshire (Appellants) v Wallbank and another (Respondents)

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Why do I need Chancel Repair Liability Insurance?

Chancel liability is an unknown risk that doesn't appear on the title deeds to your property. Whilst there have not been a large number of cases where the church looks to enforce the repair obligations onto land owners, the cost if they did is considerable and when balance against the cost of getting insurance, buyers often feel getting this protection to be the safer option.

No Search Chancel Indemnity Insurance Example

Why don’t I just get a Chancel Repair Liability Search?

Getting chancel repair liability insurance saves you possibly having to pay twice. If you buy a chancel repair liability search, you may be lucky and find that you the property does not have a liability to contribute to repairs. The cost, depending on who you go to, is similar, if not more, than the chancel indemnity insurance, so if the property is at risk the cost is twice the price of just getting the indemnity insurance.

What is covered within the indemnity insurance?

The terms of each policy differ so you should inspect your own indemnity policy, however here is an example of what is covered:

In the event of a Parochial Church Council or the Representative Body of the Church of Wales claiming to be entitled to and demanding payment towards the cost of repair to a church chancel directly arising from the Defect (“Claim”) the Insurer will indemnify the Insured against:

Any payment (including costs and expenses) awarded against the Insured in any proceedings brought against the Insured or agreed in any voluntary settlement or compromise of a Claim with the prior written consent of the Insurer
All other costs and expenses incurred by the Insured with the prior written consent of the Insurer including the costs of the Insurer in defending or settling the Claim on the Insured’s behalf

Is chancel repair insurance a one off payment?

The buyer pays for the chancel repair insurance before they purchase the property. It is a one off payment and covers the named buyers in the policy for the duration of their ownership of the property. It isn't renewed each year.

How much am I covered for?

Insurance policies typically cover you for £1,000,000 which provides sufficient cover against most conceivable claims.

Who provides the cover?

CLS and Stewart Title offer chancel indemnity

Is it worth getting even if I am a cash buyer?

Yes – even though there is no requirement to get it, not to do so might potentially put you at risk of an unexpected bill for as much as hundreds of £1,000s; buying insurance is great for peace of mind!