Restrictive Covenant Insurance
A Restrictive Covenant is a legally enforceable deed, usually created to protect specified rights concerning the use of land. As an example a restrictive covenant may have been drafted hundreds of years ago, specifying that a given plot of land cannot be used for development purposes.
In the above example, a developer may still wish to build on the plot of land, but despite exhaustive searches cannot locate the owner of the deed to negotiate its removal. Rather than abandon the project the developer may look to proceed with the build and insure the possible risk of a third party enforcing the restrictive covenant with an insurance company.
Alternatively the owner of a property may suddenly discover that he is in breach of an existing restrictive covenant, a covenant that he was not previously aware of. In this instance they may also wish to insure for the possible risk of a third party enforcing the covenant.
A Restrictive Covenant insurance policy (also known as Restrictive Covenant Indemnity insurance or Restrictive Covenant Contingency insurance) provides for any loss in the value of the property and the legal expenses
incurred in defending an attempt to enforce the covenant, subject to the selected limit of indemnity.
Unlike most insurance policies, a restrictive covenant insurance policy lasts in perpetuity and as such can be
usually be passed on to future owners of the property. In view of this, consideration should be given to incorporating an escalator clause as an inflation protection measure. For example the limit of indemnity can be automatically increased by 10% each year for the first ten years. At a later date assuming that there have been no changes to the risk, the limit of indemnity can be further increased if required, albeit subject to an additional premium payment.
Stride can provide advice and quotations for Restrictive Covenant Insurance. Please provide the following information with your enquiry:
General Information Required
• names and interests of the parties to be indemnified
• the address and general description of the property to which the enquiry relates
• the indemnity limit required and what the sum represents
• the date by which the quotation is required
Definition of the Restrictive Covenant
• explanation of why cover is required including the nature of the breach and how long the property has been in
Breach of the Restrictive Covenant
• details of any objections
• where possible, a translated copy of the document containing the restrictive covenant(s)
• any other information identifying the property burdened by the covenant(s)
• plan and ordnance survey map extract
• details of enquiries made of (and/or claims or objections from) any persons thought to have the benefit of
Details of the Restrictive Covenant(s)
• details of action taken to limit or remove the covenant(s)
• any other relevant information including opinion
Third parties who may have the benefit of the restrictive covenant(s) should not be approached as this could
prejudice the proposal for insurance
For more information on Restrictive Covenant Insurance call 023 9224 8790 or complete the online enquiry form.