"Money for old rope" - how many times have I heard that phrase during my time in the legal indemnity industry?
While it's true that claims against legal indemnity policies occur less frequently compared to some other traditional types of insurance, there is no doubt that the number of claims and the amounts paid out are increasing.
In the event that a title defect is discovered during title investigations, I'm sure that many of you would prefer to deal with the problem in the traditional way, without having to resort to insurance. Often though, trying to legally rectify an issue can prove expensive for the client and time-consuming for you, with no guarantee of a satisfactory outcome. It often also relies on a third party being co-operative, which can sometimes prove awkward. And of course, if an attempt to resolve a problem fails, and a potential claimant is alerted, it may make obtaining insurance more difficult.
In almost all instances, insurance provides a quicker, more cost-effective solution and 'oils the wheels' of the conveyancing process, preventing it from grinding to a halt. As most indemnities are required by mortgage lenders, arranging insurance will mean that conveyancers also comply with the guidelines in the CML handbook.
These days, arranging legal indemnity insurance is a quick and relatively inexpensive process. That hasn't always been the case of course; when Countrywide first entered the market in 1994, the average minimum premium for residential policies was around £250, and it could take up to a fortnight to get a reply from your insurer. Thankfully, nowadays, it's not uncommon that premiums for some covers are under £20, and response times are measured in minutes rather than days.
In my book, legal indemnities offer purchasers good value for money – a view I'm sure would be shared amongst those who have needed to make a claim.
No matter how remote a possibility it may seem, there is always the chance of a large loss: and you need only look at the case studies we've featured in intouch to imagine the painful and costly consequences of facing an issue without insurance in place.
And whether or not the purchaser ever needs to claim, without a legal indemnity policy, conveyancing transactions would often be more expensive, take much longer and may not be able to complete if a legal remedy isn't possible.
So while it's ok to consider legal indemnity insurance as a necessary evil, in my opinion, it is most certainly not 'money for old rope'.