Insurance provider First Title has launched a homeowners' protection policy (HOPP) that it claims could lower professional indemnity insurance (PII) premiums for solicitors, if it becomes widely adopted by clients.

First Title said that a similar product launched in Canada led to a 50% drop in the cost of PII for lawyers, by shifting the burden of risk from the conveyancing solicitor on to the homeowner's policy.

The policy covers risks including fraud, seller misrepresentation, boundary dispute and lack of planning permission or building regulation consents. Claims are made on a no-fault basis.

Where clients make a claim, First Title waives their subrogation rights against the solicitor and their PII insurer, unless they have acted fraudulently or dishonestly.

First Title director Philip Oldcorn said that when a similar policy became widely used in Canada, PII premiums fell by 50% over five years and have since remained constant.

He said: ‘By shifting the burden of risk from PII to the HOPP, this policy has the potential to contribute significantly to the long-term stabilisation of the conveyancing market and PII premiums, which are currently running at record levels in the UK.’

But Law Society property spokesman Paul Marsh said he was doubtful that the scheme would have any impact on PII premiums, or whether clients would want to go to the added expense of taking it out.

‘People are buying a home not an insurance policy. What they want, before making the huge financial commitment of buying a property, is to know that all reasonable enquiries have been made,’ said Marsh.

He said he was sceptical about whether the evidence of the Canadian experience would be translated to England and Wales, because the two systems are different.