Answers · UK 2025/26

What is indemnity insurance in conveyancing and when is it needed?

Indemnity insurance in conveyancing is a one-off policy that protects a buyer (and their lender) financially against a specific identified legal defect in a property's title -- such as a missing building regulations certificate, an unenforceable restrictive covenant, or a lack of planning permission for past works -- rather than resolving the underlying issue directly.

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Conveyancing indemnity insurance is a pragmatic, cost-effective way of dealing with certain legal defects discovered during a property purchase, without the time and expense of resolving the underlying issue formally. **How it differs from resolving the issue directly** Rather than fixing the defect (for example, retrospectively applying for building regulations sign-off, or formally negotiating with the beneficiary of a restrictive covenant), indemnity insurance provides a financial safety net -- if the issue is ever enforced or causes a loss (say, a neighbour successfully objects to an extension lacking planning permission, or a lender requires remedial work), the policy pays out to cover the resulting cost, up to the policy's limit. **Common situations where indemnity insurance is used** - Missing building regulations completion certificate for past extensions or alterations - Lack of planning permission for historic work (where enforcement action is now time-barred but no formal permission exists) - Restrictive covenants that are old, vague, or seem obsolete - Missing or defective guarantees for damp proofing, cavity wall insulation, or similar remedial work - Chancel repair liability (a historic, rare but real risk on some older properties near certain churches) - Absence of a proper right of way or easement where one is practically needed **Why insurers are usually willing to offer cover** Insurers price these policies based on the LOW probability of the issue ever actually being enforced or causing a claim -- for example, planning enforcement action generally cannot be taken after four or ten years (depending on the type of breach) have passed without action, so a policy covering a decade-old unauthorised extension is often relatively cheap, reflecting the low realistic risk. **Who pays for the policy** It is typically a one-off premium (often a modest fixed cost, sometimes a few hundred pounds depending on the property value and specific risk), and it is common for the seller to pay for the policy as part of resolving the issue to enable the sale to proceed, though this is negotiable between buyer and seller. **Important limitations** Indemnity insurance does NOT resolve the underlying legal issue -- it only provides financial protection if a claim materialises. It typically cannot be arranged once the buyer or seller has already approached the party who might enforce the issue (for example, once a neighbour has already complained about a covenant breach), since the point of the policy is protection against an UNKNOWN future risk, not a known, live dispute. **Does it transfer to future buyers?** Most conveyancing indemnity policies are designed to benefit the current owner and their successors in title (including future buyers and their mortgage lenders) for as long as the policy remains valid, without needing a new policy each time the property is sold -- though it is worth confirming the specific policy terms during any future sale. **Practical tip** If your solicitor identifies a defect during conveyancing that indemnity insurance could resolve, get a quote early, since the cost is often far lower than the time, expense, and risk of trying to formally resolve the underlying legal issue -- particularly for older or seemingly low-risk historical defects.