How Insurance Policies Affect Rights of Light Risk for Developers

By RightsOfLight.org.uk · 4 September 2026

Most people who look into rights of light claims eventually stumble across the topic of insurance. But there is a related and often overlooked question that sits at the heart of many modern developments: how do developers actually manage the financial risk of rights of light before they even break ground? The answer, in many cases, is rights of light insurance, sometimes called legal indemnity insurance. Understanding how this works can help affected property owners see the bigger picture when a development threatens their light.

When a developer plans a new building, one of the first things their advisors will do is commission a rights of light survey. This survey identifies neighbouring properties that might have acquired a right to light, typically through twenty years of uninterrupted enjoyment under the Prescription Act 1832. If the survey reveals potential claims, the developer faces a choice: negotiate with affected neighbours, redesign the scheme to reduce the impact, or take out an insurance policy to cover the risk. If you want to understand the basics of how these rights come into existence, you can read more about what a right of light is and the legal foundations involved.

Rights of light insurance policies are designed to protect developers against the cost of claims brought by neighbours whose light is reduced by a new building. The policy typically covers legal defence costs, any damages a court might award, and sometimes the cost of negotiated settlements. From a developer's perspective, the premium is simply another line item in the project budget. From a neighbour's perspective, though, the existence of such a policy can have real implications for how a claim unfolds.

Here is why that matters to you as a property owner. If a developer has taken out insurance, they may be less inclined to negotiate directly with you before construction begins. The insurer often takes control of how the claim is handled, and insurers tend to adopt a hard-nosed commercial approach. They may dispute the extent of your right, challenge the level of interference, or argue that damages rather than an injunction are the appropriate remedy. This can make the process feel more adversarial than it needs to be. Knowing your legal rights as a property owner puts you in a stronger position when dealing with these tactics.

One thing that catches many people off guard is the timing. Developers often purchase these policies early in the planning process, sometimes even before submitting a planning application. The insurer will want to see the rights of light survey and will assess the likelihood and potential value of claims. If the risk is deemed low, the premium will be modest. If the risk is significant, the premium could be substantial, or the insurer might decline to offer cover at all. In that scenario, the developer usually has no choice but to engage with neighbours directly.

It is also worth knowing that planning permission does not extinguish a private right of light. Even if a local authority grants consent for a development, you can still bring a claim if your light is materially reduced. Insurance policies exist precisely because developers know this. The planning system and the private law of rights of light operate on completely separate tracks.

So what should you do if you suspect a developer has insured against your claim rather than engaging with you? First, do not assume this weakens your position. A valid right of light claim does not become less valid just because an insurance company is standing behind the developer. Courts assess the merits of the claim on its own terms. Second, get proper advice early. A specialist surveyor can assess whether your light has been or will be materially affected, and a solicitor experienced in this area can advise on the strength of your claim and the best approach to take. You can find practical guidance on next steps to help you work out where you stand.

The existence of developer insurance also affects how compensation is calculated in practice. Insurers will often push for settlements at the lower end of what might be reasonable, particularly if they believe the claimant is unlikely to pursue litigation. Knowing the valuation principles, including the so-called book value of lost light and the negotiating leverage that comes with a credible threat of injunction, can make a real difference to the outcome.

In short, rights of light insurance is a tool developers use to manage risk. It does not remove your rights, and it should not discourage you from exploring a claim. What it does mean is that you need to be well informed and well advised from the outset, because the other side almost certainly will be.

Reference: Prescription Act 1832; Coventry v Lawrence [2014] UKSC 13