Indemnity Insurance in Conveyancing Explained

TL;DR: An indemnity insurance policy in conveyancing is a one-off insurance policy that protects against the financial consequences of a specific known legal defect or missing document affecting a property, rather than fixing the underlying issue itself. It's typically used when resolving a problem directly would be slower, more expensive, or simply unnecessary given how unlikely a claim actually is.

If you're partway through buying or selling a home and someone has just mentioned "indemnity insurance" in relation to a missing planning permission, an old lease clause, or something called chancel repair liability, it can sound alarming even when it's actually a fairly routine, low-cost solution. Conveyancing throws up all sorts of minor historic legal loose ends, and indemnity insurance exists specifically to deal with the ones that are impractical or unnecessary to resolve directly.

This article explains what an indemnity insurance policy actually is, when it typically gets used in residential conveyancing, what it does and doesn't cover, and the sorts of questions worth asking if one is suggested for your transaction.

As with everything on this site, I'm a blogger, not a solicitor or licensed conveyancer, so nothing here is advice about whether indemnity insurance is right for your specific situation. That's a judgment call your own solicitor or licensed conveyancer needs to make based on the actual facts of your transaction, not something to decide from a general guide like this one.

Table of contents

• What an indemnity insurance policy actually is
• Why indemnity insurance gets used instead of fixing the issue
• Common scenarios where it comes up
• How a policy is actually arranged
• What it typically costs
• What indemnity insurance doesn't cover
• Who usually pays and who benefits
• Red flags to watch for
• FAQs about indemnity insurance
• Summary and what to do next

What an indemnity insurance policy actually is

An indemnity insurance policy, in the conveyancing context, is a one-off insurance product that protects against the financial fallout if a specific, already-identified legal issue with a property ever becomes a real problem. It's not the same as buildings insurance or home insurance — it covers a narrow, defined risk rather than the property generally.

Key features of a typical policy

• A single one-off premium, paid once, rather than an ongoing annual policy
• Usually covers a very specific, named issue rather than a general set of risks
• Often runs indefinitely, or for a very long term, and can sometimes benefit future owners too
• Arranged through a solicitor or licensed conveyancer, rather than bought directly on the open market by most buyers

What it's designed to do

The purpose of the policy is to remove risk from the transaction by guaranteeing a payout if the specific issue ever causes a financial loss, rather than by resolving the underlying legal question itself. In other words, it doesn't make a missing document reappear or grant retrospective planning permission — it simply means that if the absence of that document or permission ever actually costs someone money, the policy is there to cover it.

Why indemnity insurance gets used instead of fixing the issue

For many of the issues indemnity insurance covers, actually resolving the underlying problem directly would be disproportionately slow, expensive, or simply pointless given how unlikely a real-world claim is.

Typical reasons a policy is preferred over a direct fix

1. The issue is decades old and the risk of it ever being enforced is very low
2. Tracking down the original documentation (or a missing consent) isn't realistically possible any more
3. Formally applying for something retrospectively (like planning permission) could actually draw attention to the issue rather than resolve it quietly
4. The cost and time of a direct resolution far outweighs the low-cost, one-off premium

A practical way to think about it

It can help to think of indemnity insurance as insuring against a risk rather than eliminating it. The underlying legal position doesn't change — what changes is that a financial safety net now exists if that specific risk were ever to materialise, which for many low-probability historic issues is a perfectly sensible, pragmatic way to keep a transaction moving.

Common scenarios where it comes up

Certain situations come up repeatedly across UK residential conveyancing, and it's worth being aware of them so a mention of indemnity insurance doesn't come as a surprise.

Frequently seen examples

• Missing building regulations or planning permission: for past alterations, extensions, or conversions where paperwork can't be located
• Chancel repair liability: a historic rule that can, in rare cases, make homeowners near certain old churches liable for repair costs
• Restrictive covenants: old conditions on a title that may technically still apply but are unlikely to be enforced
• Absence of a certificate: such as a FENSA certificate for replacement windows, or an electrical or gas safety certificate for past work
• Defective or unclear title issues: such as a gap in the chain of ownership documents for older properties

Why these specific examples keep recurring

Many of these issues share a common thread: they relate to historic paperwork or obligations that were either never properly recorded, have been lost over time, or stem from rules that are rarely, if ever, actively enforced in practice. Because the underlying risk of an actual claim is low in most cases, insurance becomes a proportionate, cost-effective way of dealing with them rather than opening up a lengthy investigation into decades-old records.

How a policy is actually arranged

Indemnity insurance in conveyancing is almost always arranged by a solicitor or licensed conveyancer on behalf of their client, rather than something a buyer or seller sources independently.

The typical process

1. The issue is identified, usually during title investigation, searches, or review of the property information forms
2. The solicitor or licensed conveyancer assesses whether resolving it directly is realistic or proportionate
3. If not, a suitable indemnity policy is sourced, often through a specialist insurer used regularly for conveyancing purposes
4. The policy is put in place, usually before or at completion, and a copy is retained with the property's legal documents

An important rule about existing issues

Indemnity insurance generally only works for risks that haven't yet caused a problem or been the subject of a claim. Once an issue has already been raised formally — for example, if enforcement action has actually started — it typically becomes uninsurable, because the "unknown risk" the policy is designed to protect against effectively no longer exists. This is one reason it's usually better to deal with these questions early, rather than only when they've become active problems.

What it typically costs

One of the appealing features of indemnity insurance is that it tends to be a relatively small one-off cost compared with the potential expense and delay of resolving an issue directly.

Factors that influence the cost

• The type of risk being insured, since some are considered lower risk than others
• The value of the property, since cover amounts are usually linked to property value
• The specific insurer and policy wording used
• Whether multiple issues need separate policies on the same transaction

Costs are usually modest compared with legal fees more broadly, but exact figures vary by policy and provider, so it's worth asking your solicitor or licensed conveyancer for a specific quote relevant to your situation rather than assuming a fixed price applies across the board.

What indemnity insurance doesn't cover

It's easy to assume a policy covers more than it actually does, so it's worth being clear about the limits.

Common misunderstandings

• It does not fix or resolve the underlying legal issue — the missing document or defect still doesn't exist
• It typically only covers the specific, named risk described in the policy, not related or unrelated issues
• It generally doesn't cover issues that are already known to be actively disputed or enforced
• It isn't a substitute for proper legal investigation of a property's title more broadly

Why the distinction matters

Because a policy addresses financial risk rather than legal reality, it's not something to treat as making a problem disappear. If you're ever unsure exactly what a proposed indemnity policy would and wouldn't cover, it's entirely reasonable to ask your solicitor or licensed conveyancer to explain the specific wording in plain terms before it's put in place.

Who usually pays and who benefits

Indemnity insurance in conveyancing is most commonly arranged for the benefit of the buyer and their lender, though the seller often ends up covering the cost as part of resolving an issue on their side of the transaction.

Typical arrangement

• The seller often pays for the policy, since the issue relates to something on their side of the title
• The buyer and their mortgage lender are usually the parties who benefit if a claim is ever needed
• Future owners of the property can sometimes also benefit, depending on how the policy is worded

Exactly who pays is usually a point of negotiation between the parties' solicitors, rather than a fixed rule, and it's often resolved fairly quickly once both sides agree that insurance is the sensible route forward.

Quick checklist: questions worth asking if indemnity insurance is suggested

• What exact risk does this specific policy cover?
• Why is insurance being used instead of resolving the issue directly?
• Who is paying for the policy, and who benefits from it?
• Does the policy transfer to future owners if I sell later?
• Is there anything the policy specifically excludes?

Red flags to watch for

Indemnity insurance is a routine, sensible tool in most cases, but a few situations are worth extra caution.

Worth flagging to your solicitor or licensed conveyancer

1. Being offered a policy for an issue that seems more serious than a routine historic technicality
2. Not being given a clear explanation of what the policy actually covers
3. A policy being suggested very late in the process, with limited time to properly consider it
4. Multiple unrelated issues being bundled under vague explanations rather than addressed individually

None of these automatically means something is wrong, but they're reasonable prompts to ask more questions before proceeding.

FAQs about indemnity insurance

Do I need to disclose an indemnity policy if I sell the property again later?
Generally the existence of a policy would be provided to a buyer's solicitor as part of standard title information, since it's part of the property's legal history.

Can I choose not to have indemnity insurance if it's suggested?
In principle you could decline, but your lender or the other party's solicitor may require some solution to the underlying issue, so declining insurance without an alternative fix could stall the transaction.

Does indemnity insurance mean there's definitely something wrong with the property?
Not necessarily — many policies cover very low-probability historic technicalities rather than active, serious problems, so it's worth understanding the specific issue rather than assuming the worst.

How long does an indemnity policy last?
Many are arranged to run indefinitely or for a very long fixed term, though the specific duration depends on the policy and insurer, so it's worth checking the actual terms.

Is indemnity insurance the same as title insurance?
They're related concepts and the terms are sometimes used loosely, but "indemnity insurance" in conveyancing usually refers to cover for a specific, already-identified issue, whereas title insurance can sometimes refer to broader cover.

Will my mortgage lender need to approve the policy?
Often yes — lenders frequently have their own requirements about what indemnity policies they'll accept, so this is usually checked as part of the conveyancing process rather than left until later.

Summary and what to do next

• Indemnity insurance covers the financial risk of a specific known issue, rather than fixing the issue itself
• It's commonly used for things like missing planning permission, chancel repair liability, or old restrictive covenants
• Policies generally only work for risks that haven't yet become active disputes or enforcement action
• Costs are usually modest, and payment responsibility is typically negotiated between the parties
• Understanding exactly what a specific policy covers is worth doing before it's put in place

This article is general information about how indemnity insurance typically works in UK residential conveyancing, not advice about whether it's appropriate for your transaction. Every situation is different, so always discuss the specifics with a qualified solicitor or licensed conveyancer before agreeing to any policy.

Need help or have questions?

We can't give legal advice on this site — we're bloggers, not solicitors or licensed conveyancers — but we're happy to point you toward more guides if you're trying to understand a term or process that's come up in your own transaction.

You can reach us through our contact form on the website using the button below. For advice on whether indemnity insurance is right for your specific situation, please speak to a qualified solicitor or licensed conveyancer directly.

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Reminder: this site is a blog, not a law firm, and nothing in this article is a substitute for professional legal advice. Always get personalised guidance from a qualified solicitor or licensed conveyancer before making decisions about buying or selling a home.