Indemnity insurance when buying a house in the UK (2026 guide)

If you’re in the process of buying a home, whether it’s your first purchase or a move to a new property, you may have come across the term “indemnity insurance.” While commonly encountered, this term is often misunderstood, leaving many buyers unsure of its purpose or necessity. Let’s clarify what indemnity insurance is, how it works, and why it may be essential for your property transaction. Consulting a residential conveyancing solicitor can ensure you fully understand the potential risks and protections available, helping you make informed decisions.

Indemnity Insurance – what is it?

Indemnity insurance, you may have guessed, is a type of insurance. It offers protection to sellers during conveyancing transactions. It covers the seller should there be a defect with the property that later could give rise to legal action. A seller can take out an indemnity insurance policy which would cover any cost implications should a buyer put in a claim against the property. Indemnity insurance has a one-off fee and never expires. 

Indemnity insurance is not just limited to sellers. Buyers can purchase a policy instead of rectifying defects in a property. Instead of asking their seller to rectify a problem, a buyer takes out an insurance policy to ensure that the mortgage application progresses smoothly if they are satisfied with the property otherwise. This insurance will cover both the mortgage lender and the buyer if the property loses value due to the defect. The policy usually covers issues that tend to be very low risk in terms of diminishing the property’s value, but if there were a loss, it would likely be significant. 

What does an Indemnity Insurance cover?

Indemnity insurance covers lots of different risks. These include planning permission problems, incomplete installation certificates, or any building regulation documents that are missing.  

Some of the most common policies for indemnity insurance include:

• Planning Permission

This type of policy would cover times where there has been building work completed either by a previous owner or you, but where there is no evidence of planning permission.

• Building Regulations

If there is incomplete or missing paperwork for building regulations, this type of policy will cover any costs that would incur should there be a need to remove, correct, or alter any unregulated work.

• Restrictive Covenant

When a property title has a restrictive covenant included (such as extension building restrictions) that has been breached, this policy will cover costs. These costs would include loss in value of the property and legal expenses in fighting against a covenant. 

• Liability for Chancel Repair

Chancel repair liability is the historic right of around 5,200 parish churches in England and Wales to require certain landowners to contribute to chancel repairs. The registration deadline of 13 October 2013 means that, for most properties, the liability can no longer be enforced against new owners unless the parish registered it before that date. However, since searches and registrations are still incomplete, lenders frequently still require a chancel indemnity policy as a low-cost precaution. Premiums are typically £15 to £50 for a one-off, perpetual policy.

• Access Rights (Easement Absence)

If you need to use neighbouring land to access part of your property (for example, if there is a problem with drainage), this policy will cover legal costs in the event a neighbour prevents such access.

• Missing Particulars

This policy applies when the deeds documents for a single property are in the Land Registry entry, yet they have not been provided and might contain unclarified or unknown matters. 

• No build-over agreement

This is a specific policy whereby part of a property has been built within a three-metre distance of or directly above a sewer when there is no build-over agreement in place from the water authority. 

• Adverse Possession

This means that some of the lands that have come with the property have a title that is possessory only. There is no evidence in the Land Registry that it is legally owned as a part of the property. This insurance will cover a financial loss if someone claims the land from the ‘owner’. 

The Cost of Indemnity Insurance Policies

The insurance premiums are not usually too expensive for most cases of indemnity. They are calculated on a scale, depending on how much the property is worth. They are not dependent on the risk level.

Standard policies typically cost between £30 and £600 in 2026, with non-standard or high-value policies running into four figures. Your conveyancing solicitor may also charge an arrangement fee, typically £50 to £150, for organising the policy on your behalf.

Policies for building regulation and lack of planning permission tend to be at the upper end of the scale, whereas chancel repairs tend to be at the lower end. 

Indemnity insurance is usually from specialist providers. As a result, it is unlikely that you will be able to search for deals and better offers or even negotiate a price. Solicitors can also charge an arrangement fee if they organise the insurance on your behalf. However, the good thing with indemnity insurance policies is that they are life-long and do not require yearly premiums. Future owners are covered too. 

Do you need an Indemnity Insurance Policy?

Indemnity insurance is a relatively inexpensive way of protecting both the seller and buyer from liability in the future. They also reduce delays in the sale if paperwork is missing. Many mortgage lenders and solicitors insist on an indemnity insurance policy being in place before a sale goes through.

Indemnity insurance should be obtained only when there are an apparent defect and/or risks which the Conveyancing solicitors cannot resolve. Indemnity insurance should be used as a last resort. Resolving any issues that have arisen should be the main aim when buying property. Having said that, it is often quicker than resolving a defect, and cheaper too.

Processes with known defects

Usually, the buyer’s solicitor raises queries on the title. This might lead to the revelation of defects such as a lack of planning permission, failure in not having followed building regulations, or inaccessible public right of way, for example. The seller’s solicitor will then discuss the defect with the seller and try to settle the issue to meet the buyer’s requirements before they exchange contracts. If the problem relates to a right of way, this can be resolved by looking at the Title Deeds and confirm or deny its existence and providing supporting information from neighbours as to the accessibility of the right of way. 

If the extra information is enough to satisfy the buyer and their solicitor, they can continue with the sale and give a Certificate of Title to the lender and make the mortgage fund request. However, should they not be satisfied, they might go on to insist on having indemnity insurance for the protection of both the buyer and the mortgage lender.

UK Finance, the trade body that absorbed the Council of Mortgage Lenders in 2017, publishes the UK Finance Mortgage Lenders’ Handbook, which sets out lender-by-lender indemnity insurance requirements. Your conveyancing solicitor will check the relevant lender’s section before recommending or accepting an indemnity policy.

Policy Clauses

There are clauses in all indemnity insurance policies, which mean that it will not be valid if a third party becomes aware of the problem. For example, if a policy were taken out due to a lack of planning permission for an extension and the owners then sought retrospective permission, the insurance would be invalid even in the instance the planning permission was not granted. All plans for the property should be discussed with a conveyancer if you wish to know whether indemnity insurance is appropriate.

Indemnity insurance and the Building Safety Act 2022

For flats and leasehold buildings affected by the Building Safety Act 2022, indemnity insurance now interacts with cladding and fire-safety remediation in complex ways. EWS1 forms, leaseholder protections under the Act and remediation contribution conditions can all sit alongside an indemnity policy. If you are buying a flat in a building over 11 metres tall, ask your solicitor specifically about: the building’s EWS1 status, leaseholder protections under the Act and whether any indemnity insurance offered actually addresses the relevant remediation risk. Generic indemnity policies usually do not cover Building Safety Act issues and should not be relied on as a substitute for proper certification.

Accepting or agreeing to Purchase Indemnity Insurance

Before any agreement or purchase is made, you need to speak to your conveyancing solicitor or property lawyer to ensure you understand the risks. It does not mean that any defects themselves will be remedied, it merely provides financial coverage or compensation should there be a claim in the future. 

Your policy needs to be ‘fit for purpose’, and this is why it is recommended that your conveyancing solicitor checks each condition for clarity and transparency, making sure that you are aware of anything that may invalidate it. For instance, mentioning the policy’s existence to third parties is a typical condition (as referred to above).

Need a solicitor for your property purchase?

A conveyancing solicitor is essential when considering indemnity insurance for a property purchase. They provide crucial advice on whether such insurance is needed, outline any existing title defects, and explain the risks associated with various policies. Additionally, they ensure that the indemnity insurance policy is tailored to meet specific needs, checking the policy conditions for any clauses that could invalidate it. By involving a solicitor, you gain peace of mind that all legal aspects are thoroughly evaluated, protecting your investment in the long term.

Indemnity insurance FAQs

Who pays for indemnity insurance, the buyer or the seller?

There is no fixed rule. Where the defect is the seller’s responsibility, for example, missing planning permission for an extension they built, the seller usually pays. Where the defect is older or unattributable, the buyer often pays because they are the beneficiary if a problem arises later. The point is negotiable.

Does indemnity insurance fix the underlying problem?

No. It is a financial backstop, not a remedy. The defect remains and may need to be disclosed to your own buyer when you sell on. The policy compensates you (or your lender) if a loss arises, but it does not regularise planning permission, remove a covenant or grant a missing right.

Can a buyer refuse indemnity insurance?

Yes, but the buyer’s lender often dictates the answer. If the lender insists on cover under the UK Finance Handbook, a refusal can stop the mortgage and the sale. If the buyer is a cash buyer, refusal is more practical but should still be a considered decision.

How long does indemnity insurance last?

Policies are one-off and run for the life of the title. Future owners are usually covered (subject to the policy wording), which is part of the policy’s value when the property is later sold.

Key Takeaway

If you are considering whether indemnity insurance is right for you, it is crucial to involve your conveyancing solicitor in the process. They are the experts when it comes to knowing about what needs insuring and other ways in which defects in title deeds or otherwise can be resolved. As mentioned, it is vital to consider the clauses and risks undertaken when deciding between taking out indemnity insurance or not taking it out.