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Section 106 agreements are a common occurrence in the UK, particularly in relation to planning permissions. These agreements, also known as planning obligations, are legally binding agreements between local authorities and developers that set out certain obligations that the developer must comply with when constructing a development.

One common obligation that is frequently included in section 106 agreements is an indemnity policy. This policy is designed to protect the local authority from any financial loss that may arise as a result of the development.

The indemnity policy requires the developer to pay an insurance premium, which is typically a one-time fee, to cover the potential losses that may arise. The policy is designed to cover any losses that may arise as a result of the development, such as damage to neighbouring properties or injury to individuals.

Typically, indemnity policies are put in place to cover the costs of any potential legal action that may arise as a result of the development. For example, if the development causes damage to a neighbouring property, the owner of that property may seek legal action against the developer, and the indemnity policy would cover the costs associated with defending against that legal action.

It is important to note that section 106 agreement indemnity policies are not a requirement in all cases. It is up to the local authority to determine whether or not an indemnity policy is necessary, based on the specific circumstances of each development.

If an indemnity policy is required, it is the responsibility of the developer to arrange and pay for the policy. This may be done through a specialist insurance provider or through the local authority’s preferred insurer.

In conclusion, a section 106 agreement indemnity policy is a tool that local authorities use to protect themselves against the financial risks associated with development. While not required in all cases, developers should be prepared to arrange and pay for an indemnity policy if the local authority deems it necessary. As always, it is important to consult with legal and insurance professionals to ensure that all obligations and requirements are properly understood and fulfilled.