The property owner should know about house indemnity insurance coverage for various cryptic risks that may befall his property. Such risks are different from the common ones in that they are not readily apparent. Common risks that people insure against include fire, vandalism or robbery. However, this type of risk relates to the breach of contracts relating to the construction of the property. These risks are never apparent until a claim is made by a party who is disadvantaged by the construction or modification of property.
What is house indemnity insurance?
Commonhold and Leasehold forms of property ownership restrict the owners’ ability to modify immobile properties. Ownership of property is subject to covenants that forbid an owner from making modifications to property. A leasehold owner who extends his unit will be liable to penalties demanded for by his tenant. This penalty can also be imposed to a buyer of the leasehold property rather than the previous owner who made the alteration. The holder of the insurance should not know of the covenant. Otherwise, the insurance will be invalidated. Most insurance firms need at least a twelve-month period from the breach of an agreement to the issuance of policy.
The “Breach of Covenant” policy protects the homeowner from loss of property value as a result of a breach of covenant. This is because the use of the new prohibited structures will be forbidden. The policy also protects the owner from costs of destroying the structure.
Policies taken against breach of the covenant are similar to those made in violation of building regulations. Violation of Building Regulations can affect freeholders as much as they affect leaseholders and commonholders. They arise when a structure goes against government building regulations or are constructed without due permission from the local government. The owner of the property can be barred from using the property or forced to destroy the property.
Protecting the owner
The policy protects the owner from loss of property value arising from inability to use the property. It also covers the cost of destroying the property. The owner might apply for permission to use the property rather than have it destroyed. If this is the case, then the policy will protect him from expenses incurred in obtaining permission for validation of the structure by the planning council.
A property owner may be unable to access a commodity that is necessary for maintaining a property. Such commodity includes water running in the neighbouring field but that the property owner is not allowed to use. The property owner can obtain permission to use the commodity by taking Absence of Easement policy. The policy covers for the expenses involved in obtaining legal permission to use the commodity. It also protects the owner from a reduction in property value arising from changes made in the property to compensate for the commodity.
Policy related to Churches
Churches used to exchange portions of their land with a promise that new land-owners will pay for the repair of the church. This agreement applied to anyone who occupied the property. Many new homeowners do not know of the existence of such agreements. Chancel Repair Liability policy will protect the owner should he be forced to repair the church.