Legal Indemnity Insurance, also known as Legal Contingency Insurance, is a unique insurance policy type used usually in land and property conveyancing transactions where there is a legal defect in the property Title.

 

Common examples include a Restrictive Covenant on how the land may be used or a lack of right of way which cannot be resolved, and although unlikely to cause any physical loss, has the potential to cause a significant financial loss. Most experience this when legal advisors handling the transaction bring these issues to your attention and recommend the appropriate policy be purchased.

 

A Legal Indemnity Insurance Policy can provide cover against loss suffered by the policyholder and successors in Title as a result of any legal action taken against them in respect of the Title defect.

 

This includes any reduction in value of the property along with any legal costs incurred in defending action. Where a mortgage is involved in the purchase the lender will usually be named jointly in the policy with the purchaser.

 

As with any Indemnity Insurance Policy, you must take reasonable steps to ensure that a circumstance does not arise which may give rise to the need for a claim. You must not do anything to increase the likelihood of a claim becoming necessary.

 

With a Legal Indemnity Policy, you should not disclose its existence to anyone other than your own legal advisor, your mortgage lender, or a potential purchaser or their legal advisor. A person who has a right to take action against you in respect of the Title Defect maybe more likely to do so if they believe that they would not be harming you because you are insured and any unauthorised disclosure may make the policy invalid at insurers option.

 

Unlike other types of insurance policies only one premium will need to be paid (unless you need to increase the Indemnity value of the policy at any time which will mean an additional premium will be required by the Insurer). 

 

'Contingency Insurance' can cover a multitude of situations, particularly one-off events, such as Cancellation Insurance for Weddings (to cover Deposits already paid etc,) or Fetes due to adverse weather, Golf Competitions for Hole in One and cover of Concerts where the performers fail to appear.