Rights of Light Insurance

The team at Clear are on hand to help you reach the best bespoke solution with appropriate strategies and associated terms.

Rights of Light Insurance is a type of Legal Indemnity risk, specifically an easement. The insurance product has evolved over the past decade, seeing a departure from standardised wordings and the ability to build a more robust product that is specific for each individual site.

As specialists in the procurement of Rights of Light Insurance, we’re nationally recognised having worked with developers, surveyors and law firms on a number of major developments in Central London and throughout the UK.

Right of Light, Building and window, Ancient Lights signage

How does Rights of Light Insurance work?

The insurance product is a risk transfer mechanism that allows you to draw a financial line with cost exposure (excluding professional fees) in relation to Rights of Light. The heads of loss within the policy range from compensation settlements to loss in market value of the site, in the event of an injunction.

This product puts developers in an advantageous position in the property market, from obtaining funding to disposing of the site. At this current juncture, Rights of Light Insurance is a requirement by most funders on developments.

Once a Rights of Light report has been obtained, providing EFZ and contour data, then insurance can be sought as a risk transfer mechanism to cover all the affected properties highlighted. We will collate the information provided by the surveyor, developer and solicitor, and present the risk to the market.

Once we hear back from insurers, we will compare the terms offered and provide our recommendation on which is the most suitable for you and your requirements. Not only do we take the competitiveness of premium into consideration but also the proposed strategy for each individual property and whether this suits your intentions.

The policy

Who is insured?

Freehold owners of the land, building or site, any leaseholders as well as sub-interested parties such as funders or banks plus successors in title.

Period of insurance

Cover is usually provided in perpetuity.

Limit of indemnity

Whatever you feel exposed to when considering the losses covered; consideration should be made with Clear’s help to ensure that the right level of cover is being obtained. Cover is available in excess of £1bn with the use of excess layers.

Types of coverage

With Rights of Light becoming increasingly recognised, hybrid solutions are growing in popularity with properties being designated Wait and See or Agreed Conduct strategies. Under all of the strategies, each property can be allocated a deductible or excess. Excesses associated with agreed conduct properties are only in relation to the settlement itself and all professional fees (such as legal expenses and surveyor fees) are covered by the insured.

Wait and See

This means there is no action for you to take once the indemnity is on cover. In the event of a notification, all professional fees will be picked up by the insurer.

Proactive Agreed Conduct

A third party must be approached within a set time; this differs for each insurer. Any costs and expenses of negotiating the settlement are covered by you during the Agreed Conduct phase until a claim is triggered. A claim will be triggered when discussions reach a value nearing the level of the property allocated deductible or there is a material a threat of injunction.

Reactive Agreed Conduct

Much like Wait and See, you are not required to make any approach to the third party. However, if there is a notification, any costs and expenses of negotiating the settlement will be covered by you during the Agreed Conduct phase until a claim is triggered. A claim is triggered when discussions reach a value nearing the level of the property allocated deductible or there is a material threat of injunction.

Elective Agreed Conduct

Available on a case-by-case basis, giving you flexibility to decide whether to proactively approach a neighbouring property for negotiations or wait and react if they come forward.

Heads of loss

Standard policies cover claims from existing Rights of Light risks for the following:

Compensation sums (in excess of any applicable deductibles)
Court costs and out of court settlements
Loss in the market value of the property
Defence costs, legal fees and other expenses
Abortive costs of works and alteration, demolition and reinstatement of a property
Professional fees associated with the above

Policies can be extended to include Delay Costs, Loss of Rent and Alternative Accommodation.

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Want to know more?

Find more information from our knowledgeable professionals in these downloadable documents

Rights of Light questionnaire

View

Rights of Light general guidance

View

Frequently asked questions

How do I get started?

Once you've a completed Rights of Light report, we’ll work closely with you to formulate an appropriate strategy and propose a suitable insurance solution.

To start this process, please provide us with the relevant information and documentation detailed in our shopping lists:

Pre-planning shopping list
Post-planning shopping list

The information should be submitted to our team at rol@thecleargroup.com.

Can insurance work jointly with a surveyor’s suggested negotiation strategy?

The latest Rights of Light polices can be adapted to dovetail with the strategy that you wish to employ for each injured property.

Whether you to choose to negotiate with your neighbours or not, ultimately, we can shape an insurance policy to fit with your overall strategy for dealing with Rights of Light.

What are the implications of not having cover before work starts on site?

If you've undertaken a Right of Light report and have negotiated and obtained Deeds of Release with all affected parties, there should be no need for insurance.

Should you be required to start work on site but have not yet initiated or completed negotiations, you should support your strategy with an insurance policy which allows for this. Additionally, if you reach a point where you can’t negotiate with the injured party because they choose to seek an injunction, insurance may be able to help you mitigate your losses.

What is good neighbourly conduct?

Due to recent case law, good neighbourly conduct should be reviewed when assessing Rights of Light risk to avoid the risk of an injunction. Contact us to learn more.

Why do insurers require neighbourly matters information?

To assess a risk on behalf of the insurer, the underwriter needs to understand where neighbours should be contacted to gain access or initiate licence agreements.

These processes, such as initiating licence agreements for crane over-sail or Party Wall Awards, can alert neighbours and induce a Rights of Light claim.

Is insurance available if the neighbours are aware of their rights?

Yes, potentially. It will depend on the level of the injury and the neighbours' appetite to seek legal recourse.

Can policies be arranged on a preplanning basis?

Yes, potentially. It will depend on the level of the injury and the neighbours' appetite to seek legal recourse.

Will a policy enable us to speak with neighbours about a Rights of Light issue?

Policies can be written on the basis of “agreed conduct". This will allow you to approach your injured neighbours for a release, subject to a suitable policy excess.