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Indemnity Policy for Section 106 Agreement

As a property developer, you may be required to sign a section 106 agreement as part of the planning permission process in the UK. This agreement outlines the legal obligations between the developer and the local authority, which may include the provision of affordable housing, community facilities, or infrastructure improvements.

One aspect of the section 106 agreement that may concern developers is the indemnity policy. This is a form of insurance that protects the developer against any financial losses arising from a breach of the agreement.

The reason why an indemnity policy is necessary is that a breach of the section 106 agreement can be a serious matter. The local authority may seek to enforce the agreement through the courts, which could result in substantial fines or even the revocation of planning permission.

The indemnity policy provides peace of mind to developers by covering the costs of legal fees and any financial damages resulting from a breach of the agreement. This can include compensation to the local authority, as well as the cost of remedying any damage caused.

It is important to note that the indemnity policy is not a substitute for compliance with the section 106 agreement. Developers must still take steps to ensure that they meet the obligations set out in the agreement, and failure to do so may still result in legal action.

When obtaining an indemnity policy, it is essential to ensure that it is tailored to the specific requirements of the section 106 agreement. This may involve working with a specialist insurance broker who understands the nuances of the agreement and can provide customized coverage.

In summary, the indemnity policy for section 106 agreements is an important tool for property developers to protect themselves against financial losses resulting from a breach of the agreement. While it should not be seen as a substitute for compliance, it provides peace of mind and can help ensure that developers can meet their legal obligations without undue financial risk.


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