Andrew Lugger warns property practitioners against an over reliance on indemnity insurance
Property practitioners face increasing pressure from developer clients to make decisions on how to neutralise a restrictive covenant more often and more quickly than ever before. Decision making is the cognitive process leading to the selection of a course of action among several alternatives. In relation to restrictive covenants, the alternatives range from doing nothing (because the precise wording of the covenant will not adversely affect the proposed development) to making an application under the Law of Property Act 1925, s 84.
For over 40 years restrictive covenant indemnity insurance has been underwritten by a number of insurance companies in this country. For a single “one off” payment the insurance company will issue a policy in perpetuity for those who are in breach of a restrictive covenant or going to breach covenants by some activity on the land. Insurance cover is also available to protect against breach of any unknown covenants.
A tendency has arisen, particularly in recent times, for property practitioners to reach for indemnity insurance whenever they encounter an extant
