What indemnity insurance actually does
During conveyancing, your solicitor checks the property's legal title and paperwork. Sometimes a gap or defect emerges, perhaps an extension was built without building regulations approval, or there is a restrictive covenant that may have been breached.
Rather than spending months and significant fees trying to fix the issue (for example tracking down a long-gone freeholder or applying for retrospective consent), a legal indemnity policy offers a fast, inexpensive alternative. It is a one-off payment that compensates you if the defect ever results in a financial loss, such as a third party enforcing a covenant or a council taking action.
The crucial point buyers often miss: indemnity insurance manages the risk, it does not remove it. It will not pay for the building work itself, and it does not confirm the property is safe or compliant.
Common types of property indemnity insurance
Each policy covers a specific legal risk uncovered during conveyancing.
| Policy type | Risk it covers | Typical cost |
|---|---|---|
| Building regulations | Work done without building control sign-off | £20–£200 |
| Restrictive covenant | Breach of a covenant a third party could enforce | £50–£300+ |
| Lack of planning permission | Alterations done without planning consent | £50–£250 |
| Absent landlord / freeholder | Unable to locate the freeholder to confirm lease terms | £100–£400 |
| Chancel repair liability | Liability to fund local church repairs | £20–£60 |
| Lack of access / right of way | No formal legal right to access the property | £100–£400+ |
Premiums rise with the property value and the assessed level of risk; cover is a single, lifetime payment.
When indemnity insurance is commonly used
Your conveyancer may suggest a policy when:
- An extension, loft conversion or window replacement lacks building regulations completion certificates.
- There is a restrictive covenant and no easy way to get retrospective consent.
- The freeholder of a leasehold property cannot be traced.
- Searches reveal a potential chancel repair liability.
- There is no documented legal right of access across neighbouring land.
- A lender requires cover before it will release the mortgage funds.
Do not alert the other party first
Most indemnity policies are invalidated if you contact the council, freeholder or beneficiary of a covenant about the defect, because doing so can increase the chance of a claim. Always take your solicitor's advice before approaching anyone about the issue.
How the process works
1. Defect identified
Your solicitor flags a legal gap during their title and search review.
2. Decide the approach
Choose between fixing the issue (e.g. regularisation) or taking out indemnity insurance, your solicitor advises on the trade-offs.
3. Policy arranged
Your solicitor obtains a quote and the policy, usually completed in days, with the seller typically paying the premium.
4. Cover in place at completion
The single premium is paid, cover starts, and it generally passes to future owners and your lender.
Who pays and is it worth it?
Because the defect usually pre-dates your purchase, the seller normally pays for the policy, it is part of selling a property with a legal imperfection. This is something your solicitor negotiates on your behalf.
Indemnity insurance is generally good value when the risk of enforcement is low and the alternative (fixing the defect) is slow or expensive. But weigh it carefully for safety-related issues: a policy covering missing building regulations pays out for enforcement action, not for putting right unsafe work. If you have doubts about the quality or safety of building work, a survey or proper regularisation may be the wiser route.