What does the insurance cover?
The restrictive covenant insurance Policy protects you if another person attempts to enforce or enforces restrictive covenants which affect your Property. The cover includes:
- Reasonable legal and other professional fees and expenses which the Insurer allows or requests You in writing to incur so as to commence, defend or make a settlement in a legal action relating to an Adverse Matter (which may include making an application to a court or the Upper Chamber (Lands Tribunal)).
- The cost of an out-of-court settlement relating to an Adverse Matter which the Insurer allows or requests You in writing to make.
- Damages, compensation, costs and/or expenses (but not fines or other penalties) which You have to pay because of an Order.
- The cost of altering, demolishing and/or reinstating all or part of the Property or anything built on it if this is required by an Order or is done with the Insurer’s written consent.
- The amount by which the value of the Property is reduced by the effect of an Order.
- Any money the Insurer allows You in writing to pay to a third party to free the Property from the Adverse Matter.
- Any money (including capital expenditure and legal and other professional fees) which You have actually spenton the Property which has now been lost because of an Order.
- Any other costs and expenses You incur with the Insurer’s written consent because of an Insured Risk.
You should read your own indemnity policy to see what your specific policy covers
How do you order the insurance?
You cannot get Restrictive Covenant Indemnity Insurance direct from an insurance provider. If you need to take out this insurance, your solicitor needs to do this for you. This means that if you breach a restrictive covenant during your ownership of the property, you'll have to wait until you sell to take out the indemnity insurance.
How much does indemnity insurance cost?
The indemnity premium is a one off payment and the value of the insurance depends on the value of the insured property and ranges from £150 to £500. You'll need to get your solicitor to arrange a quote for this. Although the insurance is for the new buyer/owner of the property, the actual cost is often covered by the seller as they, or the previous owners, caused the breach. The buyer should confirm with the seller on this point and if the seller is paying for the indemnity insurance then it may well be the seller's solicitor who takes out the indemnity insurance instead of the buyer's solicitor.
Does the indemnity insurance expire?
The duration of the policy is in perpetuity (it lasts forever). The policy continues to protect the buyer even after they no longer own the Property and extends automatically to future owners/occupants and their mortgage lenders.
Example of a Restrictive Covenant Indemnity Insurance
Click to see an example of a Restrictive Covenant Indemnity Insurance policy:
* This is only an example and you should speak to your solicitor to obtain your own indemnity policy for your own specific circumstances.
