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Challenging the perception 

Some conveyancing professionals may have the impression that claims on legal indemnity policies rarely occur, but that certainly isn’t the reality for our own, hugely experienced in-house claims team.

One possible reason for this misconception is that policyholders rarely contact their conveyancer when a problem arises. In fact, in 90% of claims on residential properties that we deal with, we are notified of the claim directly by the policyholder, rather than the law firm that arranged the policy.

Another factor that explains why claims may appear to be few and far between is the long-term nature of the cover we provide. Claims can arise many years after a policy has been arranged. If the property has subsequently been sold since the policy was issued, then the policy and cover would also have transferred to the successors in title, who will have had no contact with the firm originally responsible for arranging it. Indeed, while many of the claims payments made in 2024 related to policies issued in the previous three or four years, we made payments, including some significant settlements, on policies issued as far back as 1999 - and for every year since!

Risky behaviour

Of course, by their very nature, some policies inevitably lead to claims arising more frequently than others. For instance, last year the highest number of claims occurred on Access policies, which has been the case for many years. This is perhaps to be expected, as disputes relating to access are very much a ‘live’ issue when the access is in daily use. A simple change in the dynamics with neighbours, like a new owner, can suddenly create an issue, no matter how much time has passed since the policy was issued.

Alongside issues relating to access, we frequently handle claims that arise when local authorities take enforcement action for past works that lack the necessary planning permission or building regulations consent, as well as for breaches of freehold restrictive covenants. Claims on leasehold policies have increased in recent years too, most noticeably for breaches of leasehold covenants where the landlord hasn’t consented to past works. We’ve also seen a rise in search claims, as well as a rise in historical rent charge claims due to active commercial rent charge owners.

Numbers on the up

It’s not just on our most frequently obtained policies that we have seen more claims. This trend has been mirrored across our entire range of covers, with the total volume of claims steadily increasing over the last few years. Within that increase we’ve also noticed that third-party claimants seem to be becoming more persistent (or just plain angry, in some instances!), even when their legal position is weak - perhaps the result of today’s increasingly litigious society. And of course, the costs associated with dealing with claims have risen too, both in terms of the legal expenses necessary to defend and reach a settlement, as well as higher material and labour costs caused by rising inflation over the last few years. For example, on lack of listed building consent claims, the average cost of replacement windows is now between £20,000 to £25,000. Despite these increased costs though, our premiums have remained unchanged. 

As you might expect, commercial claims tend to involve higher figures because of the sums involved with large projects and developments, the length of time they typically take to resolve, and the legal costs that can be incurred to achieve a positive settlement. However, negotiating the resolution can sometimes be easier with commercial third-party claimants. If both parties involved are prepared to reach a practical and cost-effective solution, then this can often be achieved without the emotional or personal involvement that can impact disputes between neighbours in residential claims.

Supporting your clients

Regardless of the title defect that cover is taken out for, or the perception that a claim would be unlikely to materialise when the policy itself is purchased, claims can and do frequently occur – on all types of policies too.

And it’s at this point that the true value of the policy is demonstrated. The expert advice and support provided by our team often proves crucial during what can be a very stressful period for the policy holder. Depending on the circumstances involved, we may need to appoint specialist legal advisors, planning consultants or contractors to ensure that a successful resolution is reached as quickly as possible. All of which proves that the value of the cover provided can’t simply be measured by the fact that it helps a transaction to proceed. For a single one-off premium, with no annual renewal fee, our policies provide long-term comfort for policyholders too.