Posted on March 6, 2018
Banks can be cautious lenders. In the case of property, this is a sensible approach, given the value of the land usually being transferred. An issue can arise, however, when the lender insists that the law firm reporting on the transaction has Professional Indemnity (PI) insurance in place for up to the full value of the transaction. This is often for a much higher value than the usual PI cover taken out by a law firm. This can complicate matters, as PI cover is not easy or cheap to obtain.
This situation recently arose for one of our clients and the Pii team was able to provide an innovative solution. The law firm carried out their due diligence and their reports on title were then passed on to a legal indemnity provider. A bespoke policy was created for the transaction which wrapped all the properties in an all-risk policy. This provided cover for anything which might prevent the property being used as intended or that might damage the value of the land. Any known risks were also attached to the policy, creating a wide coverage, and the insurer’s usual right of subrogation was waived. This policy meant that the lender would be entitled to compensation from the insurer should any legal issue affecting the property arise.
This policy was offered as a positive alternative to extending the PI coverage of the law firm and, in the event of a claim, should result in faster settlement compared with the notoriously slow process of claiming under a PI policy. The coverage is also extended, in that the Legal Indemnity policy will also package issues which a solicitor’s PI policy would not generally extend to, such as situations which were not errors made by the law firm, but where an issue still affects the property (e.g. boundary disputes and fraud).
To find out more about how Pii can help to create a bespoke policy for your requirements, please get in touch with one of our team.
Tel: 0203 058 2536