Indemnity insurance is a one-off policy used during a property purchase to cover a legal defect that can’t easily be resolved or would be expensive and time-consuming to fix.
It protects you financially if that defect later leads to a successful legal claim.
It does not repair anything. It does not correct missing paperwork. It does not make unauthorised work compliant.
It simply protects you if the issue ever turns into a financial problem.
Policies are usually quick to arrange, often within 24 to 48 hours, and typically cost between £50 and £300 depending on the value of the property and the level of risk.
Why does it come up when buying a home?
Indemnity insurance is usually raised by your conveyancer after reviewing the legal paperwork.
As part of the purchase, they check the title register, planning history, building regulation documents and (if leasehold) the terms of the lease. If something doesn’t quite line up, they have to deal with it.
Common examples include an extension built years ago with no building regulation certificate, alterations where proof of planning permission is missing, a restrictive covenant that has technically been breached, or landlord consent that was never formally recorded.
In most cases, these issues are historic and have never caused a practical problem. But legally, the risk exists.
At that point, there are usually two options: fix the defect properly, or insure against it.
Fixing it might involve applying for retrospective approval, negotiating a deed of variation, or obtaining third-party consent. That can take months and cost thousands. If the risk of enforcement is low and your mortgage lender is satisfied with insurance, a policy is often the proportionate solution.
What does indemnity insurance actually cover?
Indemnity insurance covers legal costs and financial loss if someone successfully enforces a legal right connected to the defect.
For example, if a local authority took enforcement action because building regulations were missing, or if a third party enforced a restrictive covenant, the policy could cover your legal defence costs and any financial loss arising from the claim.
What it will not do is pay to repair the extension, replace a boiler, or bring documents up to date. It only protects against financial loss from enforcement, not the physical condition of the property.
That is why a survey and appropriate safety checks are still essential. Read here about what a surveyor does.
Can the policy be invalidated?
Yes, and this is important.
Most indemnity policies contain a condition that the defect must not be disclosed to or discussed with a third party before the policy is put in place.
For example, if you apply for retrospective planning permission after taking out planning indemnity insurance, the cover would usually be invalidated.
This is why conveyancers are cautious about how defects are handled once identified.
What is your conveyancer doing in this process?
Your conveyancer’s role is to identify the issue, assess the level of risk, check your lender’s requirements, and advise on whether the problem should be formally resolved or insured against.
If insurance is appropriate, they obtain the quote, ensure the policy covers you, your lender and future owners, and arrange it before completion.
Their job is not to make the property legally perfect. It is to make sure the purchase is legally safe and mortgageable.
Who pays for it?
This is negotiated between buyer and seller.
If the defect arose during the seller’s ownership, they often agree to pay. In other cases, the cost may be split. Because premiums are usually relatively modest, it is often agreed quickly in order to keep the transaction moving.
Is indemnity insurance a red flag to consider?
Indemnity insurance is not automatically a red flag. It is commonly used to manage historic paperwork gaps that are unlikely ever to cause trouble.
The important thing is understanding what the defect is and what realistic risk you are insuring against.
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