It is possible for a developer to take out insurance to cover themselves against the risk of legal action in respect of a right to light claim from a neighbour to the development.
In recent years a relatively small and specialist range of Insurers have created Right to Light Indemnity policies available to developers to protect them from the risk of any possible future claim in respect of an infringement of a neighbour’s Right to Light. Recent prominent cases such as Regan v Paul Properties (2006) and HKRUK II v Heaney (2010) have highlighted the legal system’s increasing willingness to award an injunction against the developer rather than compensation. The costs of compensation/damages can be significant, often being based upon a percentage of developer’s profit, but this is still very significantly less than the cost of an injunction requiring the demolition of the offending structure, possibly following completion and occupation – as in the HKRUK case, where the cost has been estimated at £2.5 million.
As a consequence, in order to allow a development to proceed without the delay of awaiting the conclusion of discussions and negotiations in relation to Right of Light matters, a developer can take out an insurance policy to protect themselves from the range of potential costs and diminution in value associated with a legal claim and any consequences of its outcome.
Policy contents and cover can be refined to meet the specific needs of the developer and the site. In the majority of cases, the cover would extend to the developer, successors in title and any lenders with a financial interest in the development building.
If you are a developer considering such insurance cover, however, it is very important to note that, under no circumstances should you discuss the possibility of insurance cover with any potentially injured parties – this would automatically prevent insurance cover in respect of those properties.
The first and most important pre-requisite of any insurer’s consideration of providing cover will always be a full Right of Light assessment from a specialist Right to Light Surveyor – to discuss any issues at all with regards to these matters, please do not hesitate to contact us. We can also suggest specialist Insurance Brokers dealing with Right of Light policies who can advise regarding specific policy issues.