In the process of selling or purchasing a building, you may come in contact with indemnity insurance for building regulations. The purpose of it is to help ensure new homeowners and succeeding owners from the local authority when legal actions take place due to legal issues that may occur resulting in a building regulation enforcement notice.
Often times it is observed that local authorities force the owners of the property to take out any work that contradicts building regulations. What are some indemnity building regulations? Keep reading this article to find out.
SEE ALSO: Top 10 Facts About Life Insurance: Pros and Cons
Getting indemnity insurance for lack of building regulations
When the paperwork for the sale of the building is been reviewed and there is no trace of the certificate of completion that proves that the building regulation process is being met, an indemnity insurance policy will be demanded from the buyer’s solicitors. This is when an indemnity insurance policy comes in as it is a way of handling the lack of building regulations without costing you much.
An indemnity policy will cover the new owner of the property against costs and losses as the result of the local authority carrying out enforcement action. Indemnity insurance for building regulations stands out amongst other insurance policies as it only needs to be obtained once.
Another factor is that the policy stays valid with no date of expiration.
The buyer and seller of a property can pay for an indemnity policy. House sellers often take out an indemnity policy to cover the cost implications of the buyer making a claim against their property. The insurance requires a one-off payment and lasts forever.
Types Of Indemnity
The word ‘indemnity’ suggests repayment against monetary loss or shielding somebody from causing a loss. Let’s take a look at some major indemnities:
Broad Indemnification
In this case, the Promisor promises to indemnify the Promisee even if the other party fails to comply. The third party isn’t left out as it will also provide coverage if the third party is found to be at fault.
SEE ALSO: Best Learners Insurance for Your Own Car
Intermediate Indemnification
Here the Promisor promises to indemnify the Promisee against the failed actions of the Promisee and the Promisor. This type of indemnity differs from the broad indemnification as it does not extend to the actions of third parties.
Limited Indemnification
This type of indemnification, allows the Promisor to promise to indemnify the Promisee only in the case where the Promisor performs an act of negligence. It doesn’t cover the actions of the Promisee or third parties.
How much does it cost?
In case you’re wondering what the cost of a building regulations indemnity insurance policy is there is no fixed cost for it at all as it greatly depends on the value of the property you intend to buy.
You must know that the cost of most building regulations indemnity insurance policy only costs a few hundred pounds. With this said, you and the other party involved with the property deal are left to decide on who pays for the policy. Often times the buyers are the ones who pay for the policy as they benefit more in the transaction.
A seller can pay as well due to the fact that they lack the building regulations documents. Buying the policy gives enablement to boost the sale but most times the cost is split between the two parties for ease of payment.
Do sellers need indemnity insurance building regulations?
Let take for instance that you intend to sell a house worth over £50k and you’ve spent over £500k on it, you would be at the losing end. Hence, spending the same £500k on a house with the same value is considered to be wise spending.
Indemnity insurance will do you more harm than good in this case as it will only cost you more as a buyer and also gives you no guarantee of you selling faster.
SEE ALSO: Top 20 Life Insurance Email Templates
Conclusion
What are some indemnity building regulations? Before you intend to purchase your own property it would be wise that you get indemnity insurance to help protect you against any risk that may occur in the future. This way you can be assured that your investment is in safe hands.
I hope this article was helpful, if it was kindly use the comments section below to share your thoughts with us.
