What Is Search Validation Indemnity Insurance?

What Is Search Validation Indemnity Insurance?

What Is Search Validation Indemnity Insurance?

Search indemnity insurance is a type of insurance policy that provides cover for losses arising from adverse entries or other issues that would have been revealed if local authority or other searches had been carried out prior to the completion of a property transaction. It protects the buyer, lender and/or seller against potential risks such as planning issues, lack of building regulations approval, flooding, mining subsidence etc.

Some key points about search indemnity insurance:

  • Policies can cover purchase and re-mortgage transactions. They insure against losses that would have been highlighted by standard local authority searches.
  • The insurance provides cover up to an agreed limit, often tied to the property value. Excesses may apply.
  • Premiums vary but are generally a small percentage of the property value.
  • Policies are usually arranged via solicitors/licensed conveyancers. Some lenders may require search indemnity insurance if searches are delayed.
  • Common policies include Search Validation to cover dated searches and No Search or Search Delay to proceed without searches.

Overall, search indemnity can help facilitate faster property transactions when searches are delayed or outstanding. It offers buyers and lenders financial protection.

What Is The Purpose Of Search Validation Indemnity Policy

Search validation indemnity insurance is a type of policy designed to cover situations where a buyer or lender is prepared to rely on one or more formal searches that have already been conducted in respect of a property. These searches could include local land charges, information held by the local authority, mining, water, or sewerage services to the property.

This type of insurance is often used in the conveyancing process, where solicitors submit various searches to public authorities to identify potential issues with the property. These searches can include a local authority search, an environmental search, and a drainage and water search.

However, there are circumstances where a buyer may choose to proceed without the relevant searches, such as when there are time constraints, long delays with the searches, or when searches have been obtained relatively recently for the property.

In such cases, search validation indemnity insurance can provide coverage for any loss sustained as a result of adverse entries that would have been revealed had the searches been undertaken or received prior to completion of a transaction.

This could include an adverse difference in market value, the cost of settling out of court, and other costs and expenses.

It’s important to note that the risks covered by search indemnity insurance can vary between providers. Therefore, it’s crucial to understand the terms of the policy and ensure its suitability for your circumstances.

Also, some lenders may not accept an indemnity policy in place of full searches, so it’s important to check with your lender before proceeding.

The policy remains in force for the duration of the ownership of the property and for any lender for the period of any mortgage advance at the commencement date.

The limit of indemnity, which is the limit to which the policy will cover against, should be incepted in accordance with the value of the property.

No Search Indemnity Insurance UK

No search insurance enables UK property purchases to complete faster without searches but offers protection if problems emerge. It is widely available from specialist providers.

Here are some key details about no search indemnity insurance policies in the UK:

  • No search indemnity insurance provides cover when buying a property without conducting local authority searches.
  • It protects the buyer and lender against adverse issues that would have been revealed by the usual searches.
  • Coverage includes planning, building control, environmental, drainage, road proposals etc.
  • Policies are issued by legal indemnity insurers like CLICS, London & European, DUAL, LawServe.
  • Premiums often range from £100-£500 depending on property value, location and insurer.
  • Can be arranged via licensed conveyancers and solicitors acting for the buyer.
  • Many lenders will require no search indemnity insurance if not doing searches.
  • Both residential and commercial purchases can be covered.
  • Usually provides cover up to a limit of the property purchase price.
  • Claims can be made anytime during ownership if an issue is discovered later.

 

What Is The Difference Between Search Validation And No Search Indemnity Insurance?

Search Validation Indemnity Insurance is used when a buyer or lender is prepared to rely on one or more formal searches that have already been conducted in respect of a property.

These searches could include local land charges, information held by the local authority, mining, water, or sewerage services to the property.

The search results must have been carried out no more than 24 months ago to be relied upon

This type of insurance provides coverage for any loss sustained as a result of adverse entries that would have been revealed had the searches been undertaken or received prior to completion of a transaction.

On the other hand, No Search Indemnity Insurance is used when a buyer has chosen not to complete local authority searches or when the results will not be available in time to complete a transaction.

This could be due to various reasons such as delays in obtaining the search results or when the buyer is re-mortgaging and the lenders require more up-to-date searches.

This policy protects against losses due to problems that would have been found, had the local authority searches been conducted.

It’s important to note that while both types of insurance provide some level of protection, they do not guarantee complete protection. For example, they offer no protection to the buyer’s quality of living once they have moved into the property

Also, the risks covered by these policies can vary between providers, and some lenders may not accept an indemnity policy in place of full searches

Search Validation Indemnity Insurance and No Search Indemnity Insurance are two types of policies used in property transactions, particularly in the conveyancing process.

They are designed to protect buyers and lenders from potential losses that could arise from issues that would have been revealed by formal searches. However, they differ in their purpose and the circumstances in which they are used.

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