TL;DR: Indemnity insurance for a house is a one-off policy bought during a property transaction to protect the buyer (and the buyer's lender) against financial loss if a specific known defect with the property causes a problem later. Typical triggers include missing planning permission, an unsigned party-wall agreement, a defective lease, an unresolved restrictive covenant, or a missing FENSA certificate. The premium is paid once, the cover lasts forever (or while the policyholder owns the property) and there is no excess. Cost is typically 20 pounds to a few hundred pounds depending on risk and property value. Indemnity insurance does NOT fix the underlying defect: it pays out if the defect is later enforced against the owner.
Last reviewed May 2026
Indemnity insurance is the conveyancing world's pragmatic answer to a defect that cannot be cured in time for completion. It does not fix the problem; it transfers the financial risk of the problem being enforced to an insurer in exchange for a one-off premium. For buyers, sellers, and mortgage lenders it is often the difference between a transaction completing on schedule and the chain collapsing.
This guide explains what indemnity insurance is, the situations in which solicitors typically suggest it, who pays the premium, what the cover does and does not include, and the limits a buyer should be aware of before agreeing to use indemnity as the solution to a title or planning problem.
What indemnity insurance for a house actually is
Indemnity insurance (also called legal indemnity insurance, title insurance, or defective title insurance) is a single-premium insurance contract issued by a specialist insurer. It is taken out at the point of purchase or remortgage and covers a specific identified defect described in the policy schedule. It does NOT cover defects discovered later that were not disclosed at the point of underwriting.
The contract pays out if the defect leads to a defined trigger event: usually an enforcement action by a third party, a reduction in market value caused by the defect, or legal costs incurred defending the position. The sum insured is typically the property's market value plus an allowance for legal costs and consequential losses, although policies can be written for a lower value where the lender accepts it.
Crucially, the premium is paid once. There are no annual renewals, no excess, and no requirement to claim within a set period. The cover continues either in perpetuity, for as long as the named insured owns the property, or for a defined long period (typically 35 years or 100 years), depending on the policy wording.
The most common types of indemnity policy
The defects insured against fall into a small number of recurring categories. Planning indemnity covers situations where building work has been done without the necessary planning permission or building regulations consent, and the four-year or ten-year enforcement deadline has not yet passed. The policy pays out if the local authority later takes enforcement action.
Restrictive covenant indemnity covers situations where a covenant on the title prohibits a particular use of the land (commonly residential use of what was originally an outbuilding, or a covenant against building) and the use has continued without challenge. The policy pays out if the person with the benefit of the covenant later tries to enforce it.
Chancel repair liability indemnity covers the rare but real risk that the buyer becomes liable to contribute to repairs of an ancient parish church. Since the Land Registration Act 2002 the risk has reduced significantly but it has not been entirely eliminated, and lenders sometimes still require the cover.
Other common policies include missing FENSA or CERTASS certificates for replacement windows, missing gas-safe certificates for boiler work, defective lease indemnity, lost-deed indemnity, unsigned party-wall agreement indemnity, missing right-of-way or right-of-access indemnity, and adverse-possession indemnity. Each is underwritten on the specific facts disclosed.
When indemnity insurance is and is not appropriate
Indemnity insurance is appropriate when the defect is historic, the risk of enforcement is low, the cost of curing the defect is high or impossible (for example because the freeholder cannot be traced), and time is short. It is the default solution where a missing certificate exists but a current homeowner has been in possession for many years without challenge.
It is NOT appropriate where the defect is current and can be cured at reasonable cost. For example, if planning permission can be applied for retrospectively, the application is normally preferred to indemnity insurance, because once the application is made the local authority is aware of the position and the indemnity will not be issued. Buyers should not, for that reason, contact the local authority about a missing-permission issue before deciding whether to insure: doing so usually voids the indemnity.
Lenders set their own rules. Most high-street lenders publish handbook entries in the UK Finance Lenders' Handbook stating when they will accept indemnity and the minimum cover. A solicitor will check the lender's handbook entry before recommending indemnity, because a policy that does not meet the lender's specification is no use for completion.
Who pays the premium and how much it costs
Convention is that the seller pays the premium where the defect is a seller-side problem (missing certificate, historic unauthorised work). Where the buyer is using indemnity because they choose to (for example a chancel repair indemnity that the seller does not consider necessary), the buyer may have to fund it. The exact apportionment is a matter for negotiation between solicitors.
Premiums are quoted by the insurer based on risk, property value, and time elapsed since the defect occurred. Typical ranges for a property worth 250,000 to 500,000 pounds are 20 to 80 pounds for a chancel repair indemnity, 50 to 200 pounds for a missing FENSA or building regulations indemnity, 100 to 400 pounds for a planning indemnity on small-scale unauthorised work, and several hundred to over a thousand pounds for a lack-of-easement, defective-title, or contested restrictive-covenant policy on a higher-value property.
The premium is paid through the conveyancer's completion statement and the policy schedule is supplied at completion. Because the policy follows the property, future owners can usually rely on the same policy provided they are added as named insureds or the policy was written in perpetuity in favour of successors in title.
What the policy will and will not pay out
If the insured risk crystallises, the policy will typically pay legal costs of defending the position, any compensation or damages awarded to the third party, any costs of restoring the property or removing unauthorised work if the local authority enforces an order, and any reduction in market value when the property is sold. The aggregate is capped at the sum insured stated on the schedule.
The policy will not pay out for problems that were known about and not disclosed when underwriting, problems that are insured under another policy (for example a building survey defect insured by professional indemnity), or problems the insured causes themselves by contacting the third party (for example writing to the local authority to ask about the unauthorised work and triggering an investigation). The "do not contact" clause is the most commonly accidentally breached condition.
Limits, alternatives, and what to do before signing
Indemnity insurance is not a substitute for a clean title or a proper certificate. A buyer using indemnity is accepting that a defect exists on the property and that the cover transfers the financial consequences of that defect to an insurer. It does not restore the legal position to one of full compliance, and a future sale may surface the same issue (in which case the existing policy usually continues, or a fresh policy can be obtained).
Alternatives include obtaining the missing permission retrospectively, negotiating a release of the restrictive covenant, locating and obtaining the missing certificate from FENSA or the relevant body, or extending the lease where the lease is the defect. Each takes time and cost that indemnity insurance avoids; whether the trade-off is worth it depends on the size of the underlying risk and the seller's willingness to delay completion.
Before signing, the buyer should read the policy schedule, check the sum insured covers the property value, confirm the lender accepts the policy form, note any conditions on contacting third parties, and keep the policy schedule with the property deeds. The conveyancer should retain a copy on the file.
How we verified this
The structure and triggers of indemnity insurance described here reflect the UK Finance Lenders' Handbook (which sets out what mainstream lenders will and will not accept), the Council for Licensed Conveyancers and Solicitors Regulation Authority guidance on indemnity policies, and the Land Registry's published guidance on registered title defects. The Financial Conduct Authority regulates the insurers writing these policies. No invented firm-reference numbers or premium quotes have been included; cost ranges given are typical market figures and any individual policy quote will vary by insurer and risk.
Disclaimer: This article is general information about legal indemnity insurance used in UK residential conveyancing. It is not legal or financial advice. The decision to use indemnity insurance in any particular transaction depends on the specific defect, the lender's requirements, and the conveyancer's advice. Anyone in a live transaction should rely on their solicitor or licensed conveyancer rather than on general guidance.
Frequently asked questions
What does indemnity insurance for a house actually cover?
It covers the financial loss caused if a specific identified defect with the property (missing planning permission, missing building regulations certificate, breached restrictive covenant, defective lease, missing FENSA certificate, chancel repair liability, lost deed, and similar) leads to enforcement action, damages, legal costs, or a reduction in market value. The cover is set out on the policy schedule and is limited to the defect listed.
Is indemnity insurance a one-off payment?
Yes. Indemnity insurance for a house is a single-premium policy with no renewal payments. The premium is paid once at completion of the property transaction and the cover continues for the duration stated in the policy (often in perpetuity, sometimes for the duration of ownership, sometimes for a long fixed period of 35 or 100 years).
Who pays for indemnity insurance, the buyer or seller?
Convention is that the seller pays where the defect is on their side (an unresolved title issue or missing certificate). Where the buyer or their lender insists on a policy that the seller considers unnecessary, the buyer may end up paying. The split is settled between solicitors during conveyancing and recorded in the completion statement.
Can I cancel indemnity insurance?
The policy is a one-off contract paid up at inception so there is nothing to cancel in the conventional sense. The policy lapses if the property is sold and the new owner is not added (depending on the policy wording) or if the underlying defect is resolved (for example planning permission is granted retrospectively), in which case the policy ceases to have any practical effect.
Will indemnity insurance always satisfy a mortgage lender?
Most mainstream UK lenders will accept indemnity insurance for a defined list of defects, on the conditions set out in the UK Finance Lenders' Handbook entry for that lender. Some lenders or specific lending products may refuse to accept indemnity for certain defects, particularly where the value of the defect is large compared with the property value, so the solicitor will check the lender's handbook before recommending a policy.
