Rights of Light Insurance
Debunking the misconception of Rights of Light insurance, re-iterating the importance of cover, and the implications involved
Holly Hamer, Business Development Executive at PIB Insurance Brokers, discusses common misconceptions developers may have about Rights of Light insurance being difficult and expensive to procure.
Common misconceptions about Rights of Light Insurance and the importance of a policy
If you have required Rights of Light (ROL) insurance in recent years, then you may have been surprised to see the rise in the cost of the premium and size of excesses, as well as the strict clauses incorporated in the policy and thought that it would make better economic sense to self-insure instead.
The issue then is that you could incur significant financial losses, delays or even demolition, the costs of which could have been mitigated if an insurance policy had been taken out (the earlier the better!). A ROL policy runs in perpetuity and claims can be made a number of years after the development has been completed, it is therefore often a requirement of lenders that a policy is taken out.
Furthermore, the compensation budgets listed in the ROL report are not set in stone figures, and there is no compulsion on the injured party to accept this figure, and the courts could award much higher damages than what has been suggested.
In more recent years, people have gained a greater understanding about this subject, and it isn’t unusual now for some businesses to track developments so they can demand compensation, as well as engaging with neighbouring properties which could also be injured.
What does the policy provide cover for?
- Reduction in market value
- Legal Defence and settlement costs/
- Abortive development costs
- Contingent losses - Delay Costs/Loss of Rents/Alternative Accommodation
What are the key benefits?
- Cost/time effective
- Generally acceptable to funders and tenants
- Agreed Conduct allows the insured to remain in control of negotiations
- Caps the financial risks associated with rights of light
- Passes to successors in title
Why choose PIB Insurance Brokers?
PIB has years of experience dealing with ROL risks , we will work with you to ensure that the most suitable policy is put in place so that the transaction can progress.