What is Indemnity Insurance and When Might You Need It?
Somewhere between offer acceptance and exchange, your solicitor may email to say the property has a missing document or a defect on its title, and they're suggesting indemnity insurance to cover it. If you've never bought a house before, this is often the first time you'll have heard of it, and it can feel like being asked to sign off on something unknown with only days to go.
Indemnity insurance is one of those quiet parts of conveyancing that catches most buyers off guard. It doesn't come up in general house buying advice online, but it appears in a meaningful percentage of UK property purchases. Here's what it actually is, when it might make sense to use it, and what to check before you agree.
What indemnity insurance actually is
Indemnity insurance is a one-off insurance policy that protects you (and your mortgage lender) against financial loss arising from a specific defect or missing document related to the property after you've purchased. It's a form of legal protection, not a fix. The policy pays out if the defect leads to enforcement action from your local authority, legal fees, or a reduction in the property's value in future.
Crucially, it doesn't resolve the underlying issue. If a previous owner did work to the property without proper building or planning regulations approval, the indemnity policy doesn't retroactively approve it. It just means that if the council or another party comes after you for it, the insurer covers the financial consequences.
The policy is a single payment, not an annual premium, and it stays with the property. If you sell in future, it needs disclosing to your potential buyers and the same policy then continues to cover them.
Common situations where it's used
Missing building regulations approval is one of the most common triggers. If a previous owner extended the property, converted a loft, or replaced windows without building regulations sign-off, indemnity insurance can protect you against future enforcement.
Missing planning consent works similarly. Extensions or changes of use without planning consent are risky to buy, and indemnity insurance can bridge the gap when the council's window for enforcement is closing. For more on what to check before you buy, see our full guide to building regulations and planning permission.
Restrictive covenant breaches are another common trigger. Older properties often have restrictions written into their title deeds limiting things like extensions, business use, or types of pets. If the current use technically breaches one of these, indemnity insurance can protect against the person entitled to enforce the covenant coming forward.
Other common uses include chancel repair liability (a historical obligation to contribute to local church repairs), absent landlord policies for leasehold properties where the freeholder can't be traced, and missing FENSA certificates for replacement windows.
How much it costs and who pays
Indemnity insurance is usually cheaper than people expect. Standard policies for common issues typically cost £50 to £500 as a one-off payment. More complex or higher-value policies can run to £1,000 or more. Who pays depends on the negotiation.
Most conveyancing solicitors will argue the seller should pay, since it's their unresolved issue. In practice, it often depends on which side has more leverage at that stage of the sale. If the buyer wants to complete quickly and the seller has other interested parties, buyers sometimes end up paying to keep the deal moving.
Your solicitor will typically arrange the policy through a specialist provider. You don't need to shop around, but it's worth asking them to explain what the policy actually covers.
When it's the right solution and when it isn't
Indemnity insurance is the right choice when the underlying risk is genuinely low, the cost of resolving the issue properly is disproportionate, and both parties want to complete without a long delay.
It's not the right choice when the issue reflects a genuine unresolved problem. If the property has been extended in a way that clearly doesn't meet current building regulations, indemnity insurance protects you against enforcement but doesn't protect you against the extension being structurally unsound. It also doesn't protect you from the local authority requiring you to foot the bill for regularisation costs to fix the issue if it's still within their enforcement period.
One important nuance: once you or your solicitor formally approach the relevant authority (like the council or the covenant holder) to check whether an issue is enforceable, you can no longer get indemnity insurance for it. Insurers view any approach as increasing risk. This is why the decision needs to be made carefully and before anyone starts asking questions.
You should also think about whether you might want to do work to the property in future. If the local authority uncovers the original defect while assessing a new application, that would invalidate your indemnity policy and leave you exposed.
What to check before you agree
Before agreeing to an indemnity policy, ask your solicitor a few things. What specifically does the policy cover, and what does it exclude? What's the maximum payout, and is it enough to cover the potential loss? Does the policy pass to future owners if you sell? Are there any conditions that could invalidate the policy?
It's also worth asking whether indemnity is genuinely the right solution or whether the underlying issue should be resolved properly instead. Often the seller can get retrospective building regulations approval, known as regularisation, for a modest cost, which is a cleaner resolution than an insurance policy that only covers financial loss.
For a fuller picture of what your solicitor should be checking during conveyancing, see our guide to the conveyancing process and what your solicitor should be doing.
The full checklist
The Home Truths Guide includes 100+ essential questions to ask at every stage of buying a home in the UK, covering house viewings, making an offer, surveys, conveyancing, special circumstances and exchange and completion. The conveyancing section includes the specific questions to ask if your solicitor raises indemnity insurance, and how to know whether it's the right solution for your purchase.
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