The Lemon Fool

I'm buying a house that will have chancel liability insurance on purchase, but on the policy the use of the property is shown as residential. I may want to register a private limited company at the address and use part of the house or outbuilding as a small workshop, in addition to the residence. Is it likely that I will be able to take out an additional policy to cover this? I'd ask my solicitor, but any minor query seems to result in delay and we are already running late.

Thanks for any reply.

Forget the solicitors, you'll have to tell and ask the insurers. Should you ever have to claim and you've put "residential" as the use of the property but the insurers deem that it isn't fully so, then they might well say that your statement of facts wasn't correct and use it as an excuse to deny paying out. Tell the insurers your plans and see what they say about it.

AFAIK any unregistered liability to chancel maintenance dies with the first transfer for valuable consideration after 2013.

https://sasdaniels.co.uk/blog/chancel-r ... me-buyers/

they might well say that your statement of facts wasn't correct and use it as an excuse to deny paying out. Tell the insurers your plans...

Yes this is my concern. But the policy isn't mine yet - contracts have still to be exchanged, and completion won't be for some weeks. The insurers might well not discuss it with me. Hence my question as to whether later arranging two policies, perhaps from different companies, will protect me. The premiums are not large so this looks simpler than trying to get the solicitor to amend the policy (which is being provided by the seller). It really is very difficult to get communication from the solicitor.

mc2fool wrote:Forget the solicitors, you'll have to tell and ask the insurers.

This is something you should almost certainly not do.

This type of policy is an off the shelf product costing next to nothing, and such policies are routinely used by lazy and /or incompetent conveyancers as it’s easier than having to consider whether the risk being insured against is actually a risk at all.

In the vast majority of cases there is no justification at all for a chancel repair policy as the risk just doesn't exist, but in the very rare cases it might exist the solicitor will have bought one not just for your protection but also to comply with their obligations to your mortgage lender, if any.

However, if you go wading in with awkward questions to the insurance company there's a serious risk that they might say the policy would be voided if you ran a business from the property. If so, your solicitor would no longer be able to tick the mortgage lender's box, and they would have to report back that although there was an identified risk they could no longer get an insurance policy to cover it as you’d spooked the insurers.

In that event the lender would probably refuse to release the loan, or would at least insist on the matter being fully investigated, which would potentially be a costly and long-winded exercise, with no guarantee of a good outcome.

In practical terms it's almost certainly of no consequence anyway, as the purpose for which the property is used will almost certainly be entirely irrelevant to the question of whether it has any actual liability.

You should therefore go back to your solicitor and ask them to explain exactly why they are recommending the policy, and to identify what risk there actually is. You may find that there is no actual risk at all, and that the policy is completely unnecessary.

Clitheroekid wrote:However, if you go wading in with awkward questions to the insurance company there's a serious risk that they might say the policy would be voided if you ran a business from the property.

And that is exactly what you want to know. Then you either don't run a business from the property or you get the solicitor to find a policy that covers it if you do.

Clitheroekid wrote:If so, your solicitor would no longer be able to tick the mortgage lender's box, and they would have to report back that although there was an identified risk they could no longer get an insurance policy to cover it as you’d spooked the insurers.

If simply asking a question of the insurers "spooks" them to the point that they refuse cover, see above.

Clitheroekid wrote:You should therefore go back to your solicitor and ask them to explain exactly why they are recommending the policy, and to identify what risk there actually is. You may find that there is no actual risk at all, and that the policy is completely unnecessary.

Hopefully the solicitor has already done the job properly and hopefully has not recommended having a policy that is completely unnecessary, but let's say the OP asks that and the solicitor identifies a material risk and determines that such a policy is necessary, what would you, as that solicitor, then tell the OP about their query?

Thank you to all who have replied, all have been most helpful. This appears to be an area containing traps to tread on, so I am stepping carefully - initially alerted to the hazards by an earlier answer from Clitheroekid (can't find the reference now).