Insolvency Indemnity Insurance

Insolvency Indemnity Insurance is required by most mortgage lenders, especially when the property's title involves a gift deed or a previous transaction undervalued within 5 years. This insurance protects against risks related to transferring property titles, as outlined in Sections 339-342 of the Insolvency Act 1986. Unlike typical insurances such as building or car insurance, obtaining insolvency Indemnity Policy requires involvement of a solicitor, with the seller obligated to provide a Declaration of Solvency.

Typically, mortgage lenders stipulate the need for indemnity insurance if the property title is subjected to a deed of gift or an undervalued transaction. Failure to provide an unqualified certificate of title necessitates arranging indemnity insurance.

The cost of Insolvency Indemnity Insurance varies depending on property value, solicitor fees, and the chosen insurance provider. Coverage includes compensations for incurred losses resulting from insured risks such as damages, costs, or expenses due to a court order, or any reduction in property value because of legal actions.

However, the insurer reserves the right to deny or reduce payment for a loss if false information is provided, or if a fraudulent claim is made, or if the policy's existence is disclosed to unauthorized parties.

The policy duration aligns with the mortgage term. Covered losses include legal fees, court orders, shortfall under the mortgage advance, out-of-court settlements, and other expenses incurred due to insured risks, all subject to insurer consent.

Restrictions on cover mandate the borrower to use the property as noted in the policy and refrain from disclosing the policy's existence except to prospective purchasers, their mortgagees, and legal representatives. Additionally, communication regarding insured risks is limited, and court applications necessitate insurer consent.

In cases of transfer of equity undervalue, such as parents gifting property to children, solicitors often advise obtaining the insurance policy to safeguard against the transaction's nullification.

Please call us on 0345 603 0708 or email indemnities@legalbrokers.com to discuss your needs and obtain a quote.

Legal Brokers Ltd

Insolvency Indemnity Insurance