What is Title Indemnity Insurance?

Full Definition

Title indemnity insurance is a specialist insurance policy, usually paid for as a single one-off premium rather than an ongoing annual cost, that protects against financial loss arising from a specific, identified defect or risk in a property's legal title, rather than covering the property or its condition generally. It is commonly used in conveyancing to allow a transaction to proceed despite an unresolved legal issue that would otherwise be costly, slow or impractical to fix outright -- typical examples include a missing right of way where a property's only practical access route is not formally documented, a breach of a restrictive covenant such as an extension built without the required consent, a defective or absent planning permission or building regulations certificate for historic work, chancel repair liability, or a break in the chain of title where historic ownership documents cannot be traced. Rather than tracking down and negotiating with whoever might be entitled to enforce a covenant or easement, which can be slow, expensive and sometimes impossible if the beneficiary cannot be identified or has long since disappeared, a title indemnity policy instead provides a lump sum payout if the risk crystallises -- for example, if someone with standing to object later brings a successful claim or enforcement action -- covering costs such as compensation, legal fees, and in some cases the cost of remedial works or a reduction in property value. Policies are typically arranged by the seller's or buyer's solicitor as part of the conveyancing process, are paid for with a single premium (commonly a few hundred pounds, though this varies with the risk and the property's value), last indefinitely (or for a very long fixed term) rather than needing annual renewal, and must usually be put in place before the specific risk is disclosed or raised with anyone who might benefit from enforcing it, since insurers will not cover a risk that has already been notified to an affected party. Because these policies are risk-specific, a title indemnity policy covering a missing right of way, for instance, does nothing to protect against an unrelated boundary dispute or a chancel repair liability, so any additional risks identified during conveyancing generally require their own separate policy.

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