Two major indemnity insurers have declined cover in respect of restrictive covenants despite counsel's opinion to the effect that they were unenforceable. This was on the grounds that a claim 'might' be made and that this would incur costs. This throws into sharp relief the question of what these policies in fact cover. Has anyone made a claim under one?


One perhaps cannot blame insurers for only covering situations where claims will never be made. However, it seems to me that such policies have, in no small measure, hastened the demise of 'professional judgement'. Now everything has to be insured, even where a practical solution is possible or, more likely, when even the man on the Clapham omnibus would deem the risk infinitesimal - for example, lack of planning permission for work carried out 20, 15 or even ten years ago. This is also partly because of the over enthusiastic interpretation of the Council of Mortgage Lenders' requirement to take 'reasonable' steps to ensure planning permission is complied with.



Indemnity insurance benefits the insurance companies and can sometimes be a cheap/quick solution, but does it really benefit the profession or, more importantly our clients?



CJ McGrorty, The Merriman Partnership, Marlborough, Wiltshire