15 Jun 2026
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If you're buying or selling a property, your conveyancer may recommend taking out an indemnity policy. For many people, this is the first time they've heard the term, which often leads to questions about what an indemnity policy actually is, who pays for it, and whether it's really necessary.
In this article, we'll explain how indemnity policies work, the most common situations where they're used, and what you should know before agreeing to one.
An indemnity policy is a type of insurance designed to protect property owners and mortgage lenders against specific legal risks associated with a property.
Rather than fixing a legal issue directly, an indemnity policy provides financial protection if that issue later causes a problem. It is often used when resolving the issue would be difficult, expensive, or could significantly delay a property transaction.
The policy is usually purchased as a one-off payment and can often continue to protect future owners and mortgage lenders as well.
Property transactions can uncover issues that may not be straightforward to resolve.
For example, your solicitor may discover:
In many cases, the practical risk is low, but mortgage lenders still require protection before they will lend against the property.
An indemnity policy can provide that reassurance and help prevent delays to the transaction.
One of the most common indemnity policies relates to building works carried out without the correct building regulations certification.
Examples include:
If documentation cannot be located, an indemnity policy may be used to protect against potential enforcement action.
Where planning permission records cannot be found or there is uncertainty about historic works, an indemnity policy may help address lender concerns.
Many properties are subject to restrictive covenants that limit what owners can do with the land.
Examples include:
If a covenant has potentially been breached, an indemnity policy may provide protection against future claims.
Although most properties are now registered with HM Land Registry, missing historical documents can still occasionally create issues.
An indemnity policy may be used where important documents cannot be located.
Although much less common today, some properties may still be affected by historic church repair liabilities. An indemnity policy can protect against potential claims.
Every policy is different, but indemnity insurance typically covers:
It is important to understand that an indemnity policy usually does not fix the underlying problem.
For example, if an extension was built incorrectly, the policy is unlikely to cover the cost of rebuilding the extension. Instead, it may cover losses arising from enforcement action linked to the missing approvals.
Indemnity policies are subject to conditions and exclusions.
They may not cover situations where:
Your conveyancer will explain the limitations of any policy being recommended.
There is no fixed rule.
In many transactions, the seller agrees to pay because the issue affects the property they are selling. However, this is ultimately a matter for negotiation between the buyer and seller.
The premium is usually a one-off payment rather than an ongoing insurance cost.
Whether you need an indemnity policy depends on the circumstances.
In some situations, it may be possible to resolve the issue directly. In others, obtaining the missing information could take weeks or even months and may not be possible at all.
An indemnity policy can often provide a practical solution that allows the transaction to proceed while protecting the parties involved.
Your conveyancer will advise whether the policy is appropriate and whether alternative options should be explored.
For many buyers and sellers, indemnity policies offer peace of mind and help prevent unnecessary delays.
Mortgage lenders frequently accept indemnity insurance as a practical way to manage low-risk legal issues that would otherwise hold up completion.
Because the premium is usually paid once and the protection often extends to future owners and lenders, they can represent a cost-effective solution where a defect cannot easily be resolved.
Every property transaction is different, and the right approach will depend on the nature of the issue identified.
If you're buying or selling a property and have been told an indemnity policy may be required, our experienced residential property team can explain your options and help you move forward with confidence.
Contact Hegarty today for clear, practical conveyancing advice.
Whatever legal support you need, our experienced and highly skilled solicitors and legal advisors are here to help. With expertise across a wide range of legal areas, we provide clear, practical advice tailored to you. What sets us apart is our commitment to understanding your needs and delivering the best possible outcome with a personal touch.
