House Conveyancing Insurance
When buying or selling a property in the UK, arranging appropriate insurance cover is an essential part of the conveyancing process. With homes often being the most valuable asset someone possesses, having protection in place for your property transaction provides peace of mind should any issues or disputes arise.
This guide covers the key insurance considerations for buyers and sellers. It examines legal indemnity insurance, why the cover is recommended, what common policies protect against, what factors influence premium costs and tips for finding appropriate cover. Having conveyancing insurance means your property transaction is safeguarded.
Why Conveyancing Insurance is Recommended?
There are several key reasons conveyancing insurance is strongly advised for all property transactions:
- Protects against legal risks – Covers potential title or boundary issues for example.
- Protects against financial loss – Provides payout in the event of disputes over the property, boundary etc.
- Gives peace of mind – Knowing you have protection for significant assets.
- Mortgage lender requirement – Most lenders make insurance mandatory.
- Covers errors – Protection if mistakes are made during conveyancing.
- Required for some transactions – Such as purchasing unregistered land.
Even the most cautious and diligent buyer or seller can encounter unexpected property disputes or revelations around planning, drainage, rights of way, etc. Having insurance removes concerns over expensive payouts should problems arise. It’s a small but valuable investment.
Common Types of Conveyancing Insurance
There are various insurance policies that may be required or recommended. Common options include:
- Title Indemnity Insurance – Covers loss from defects in the property’s title deeds preventing sale.
- Building Warranty – Protects against structural issues in newly built properties.
- Property or ‘Latent’ Defects Insurance – Covers unforeseen property faults like subsidence.
- Planning Permission Indemnity – If works lack planning consent.
- Rights of Way Insurance – If access rights are disputed.
- Chancel Repair Insurance – Covers liability for church roof repairs. Rare requirement now.
Other more specific policies may also be applicable to a property. Conveyancers will assess and recommend appropriate cover.
Key Policy Benefits and Inclusions
Conveyancing insurance policies vary but key benefits and inclusions buyers and sellers should look for:
- Legal advisers cost – Fees to resolve disputes covered.
- Financial compensation – Up to policy limits if issues can’t be resolved.
- Property access rights – If these are legally challenged.
- Legal ownership disputes – Challenges to the seller’s right to sell.
- Boundary or area disputes – If ownership rights over boundaries are unclear.
- Planning permission issues – If work done lacks council consent.
- Structural damage – Only for new build warranty policies typically.
- Full policy term cover – Protection lasting years not just during transactions.
- Title deed coverage – Rectifying problems with proving ownership.
Thoroughly check policy terms as conveyancing insurance exclusions do apply in some cases. Homebuyers should beware of cheap ‘basic’ title insurance offerings and limited benefits. Paying that bit extra provides protection worth the investment.
When is Conveyancing Insurance Required?
While insurance is recommended for all transactions, some purchase scenarios may make coverage mandatory:
- If taking out a mortgage – Lenders often make it a condition of granting the loan.
- Buying unregistered land – Higher risk so insurance is usually insisted upon.
- Buying shared ownership – Required due to leasehold complexities.
- Off-plan new build purchases – Policies protect against development risks.
- Title issues identified – Used to cover potential problems revealed.
- Restrictive covenants on land – Covers associated legal risks.
Even if insurance is not mandatory, buyers and sellers should give careful thought to the benefits of protection in case problems arise further down the line after sale completion. A long-term policy provides security for minimal outlay.
What Influences the Cost of Premiums?
While conveyancing insurance offers clear benefits, what determines how much those premiums will be? Key factors include:
- Property value – Premiums are higher for more expensive properties.
- Type of policy – Some policies cost more e.g. for unregistered land.
- Policy term – Longer terms spread the cost but increase premiums.
- Excess amount – Higher voluntary excesses reduce premiums.
- Coverage limits – Higher max payouts increase premium costs.
- Perceived risks – New builds or known title issues increase premiums.
- Insured party – Policies for lenders cost more than self-insuring.
- Geographical area – London and southeast regions attract higher premiums.
- Claims history – Previous claims on a property may increase costs.
As with all insurance, conveyancing premiums reflect the scale of risk insurers take on, meaning an expensive house with known drainage issues for example would incur a higher premium. Shopping around is still worthwhile, but the cheapest isn’t always the best with complex policies protecting major assets. An expert broker can advise the optimal cover.
Conveyancing Insurance Tips
To ensure you get suitable coverage at a reasonable and clear cost, useful insurance tips include:
- Get quotes early when the sale is agreed upon – Start the process swiftly.
- Use a specialist broker – For expert policy advice.
- Read policy terms thoroughly – Check what is and isn’t covered in detail.
- Understand the risks you want to be covered – And communicate these clearly.
- Be honest about any property issues – Insurers will uncover these anyway.
- Ask about excesses and payment caps – To gauge the level of protection.
- Check any warranties you already have – And their relation to new policies.
- Look for long-term cover – Protection lasting 25 years or indefinite cover is preferable.
- Seek inclusive fees – Some insurers include all fees and searches.
Taking time to make enquiries, understand policies, and communicate property risks gives peace of mind that suitable cover at a fair cost is secured.
So, what is exchange of contracts? The exchange of contracts is a key stage in England and Wales property transactions when signed sale contracts are exchanged between the buyer’s and seller’s solicitors. This legally commits both parties to the sale. It occurs before completion. In Scotland, this is known as the conclusion of missives.
Why Use a Specialist Broker?
Rather than going direct to insurers, a specialist conveyancing insurance broker can provide value including:
- Access to a range of policies and insurers – Opening up more choices.
- Expert policy comparison – To get the optimal cover.
- Assessing risks – Skilled at judging threats requiring cover.
- Policy administration – Streamlining arrangements with insurers.
- Ongoing support – Assistance adjusting policies if needed.
- Market experience – Understanding insurer reputations.
- Assessing property history – For any past issues or claims.
This expertise helps ensure buyers and sellers get tailored policies at fair premiums without paying for unnecessary cover. Brokers also simplify liaising with multiple parties involved in transactions.
When undertaking property transactions, conveyancing insurance should never be an afterthought. While additional cover represents another cost, this pales in comparison to the financial nightmare uninsured disputes, defects or ownership issues can cause. Taking time to understand risks, and policy choices and secure quotes early on provides long-term protection.
In buying a property, a thorough conveyancer will identify where insurance is mandatory and recommend any other cover that would be wise. Look beyond merely satisfying lender requirements to your own priorities of risk management. For sellers too, insurance helps expedite sales when issues arise during conveyancing. With both parties adequately covered, transactions stay on track.
Conveyancing insurance underpins property transactions with essential financial and legal protection. Use a specialist broker and always carefully assess if policies truly cover your priorities rather than blindly accepting standard offerings. The investment brings invaluable peace of mind.