The Insolvency Act legal indemnity insurance policy provides cover when a dwelling-house or flat based within England and Wales has been given away or transferred at less than its true value, or when part of the purchase price, typically the deposit, has been provided by someone other than the buyer. If the person who made the “gift” becomes bankrupt, it is possible for the gift to be set aside or overturned and for the trustee-in-bankruptcy to claim an interest in the property. The policy can also be used when property has been acquired by a surviving joint tenant.
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Key Features and Benefits
If a trustee-in-bankruptcy of the person who made the gift or transfer at undervalue seeks to have it set aside and claims an interest in the property, the policy provides cover for the following up to your selected limit of indemnity *:
- the reduction in the value of the property
- sums paid with our consent to protect your interest in the property
- other costs and expenses with our consent.
This policy covers loss incurred by mortgage lenders and any owner who has paid the full value for the property. The policy does not provide cover for the person making the gift or the person to whom the gift is made.
The policy automatically covers subsequent owners of the property and mortgage lenders, and remains in force from the day you issue it without any time limit.