TL;DR: An indemnity policy (sometimes called legal indemnity insurance or title insurance) is a one-off insurance contract used in conveyancing to protect the buyer (and the lender) against a specific defect in the title to a property. It does not fix the underlying problem; it provides a financial pay-out if a third party makes a successful claim arising from the defect. Common uses include missing planning permission or building regulations consent, lack of restrictive covenant consent, and unknown rights of way. The policy is usually arranged by the seller's solicitor, paid for as a one-off premium, and lasts indefinitely (passing to future buyers and lenders). Premiums are typically modest, often a few tens or low hundreds of pounds for a residential transaction, depending on the property value and the risk being covered.
Last reviewed May 2026
An indemnity policy is a niche but useful piece of insurance that turns up in many residential property transactions. When the conveyancing investigation throws up a small but technically real defect in the title (a missing planning consent, a covenant breach with no obvious source of consent, an absent right of way) the cleanest way to keep the transaction moving is often an indemnity policy rather than a costly attempt to fix the underlying problem.
The policy is a contract of insurance, not a legal cure. It does not retrospectively grant planning permission, change the title at the Land Registry, or extinguish a right someone else holds. What it does is shift the financial risk of the defect from the buyer (and their lender) onto the insurer, so that if a third party brings a successful claim arising out of the defect in the future, the insurer pays the resulting losses up to the policy limit.
This guide explains when indemnity policies are used in conveyancing, what they actually cover, who pays for them, what they cost, and the situations where they are not the right answer.
What an indemnity policy is and is not
An indemnity policy in a property context is a one-off, lump-sum insurance contract entered into at the time of (or shortly before) completion. The insurer agrees, in return for a one-off premium, to pay out under specified circumstances connected to a defined risk in the title or the property's history. The policy continues in force without further premiums for as long as it is needed.
The policy is named (typically) after the buyer and any lender, and the cover usually transfers automatically to successors in title (future buyers and their lenders). That feature is what makes the policy useful: once it is in place, the defect ceases to be a transactional obstacle for future sales of the property.
What the policy does not do is alter the underlying legal position. The covenant or planning issue still exists. The policy simply provides money to deal with the consequences if the risk crystallises. If the defect can practically be cured (for example, by obtaining the missing consent), curing it is generally a more permanent solution than insurance.
The typical risks an indemnity policy covers
The most common risks covered by indemnity policies in residential conveyancing fall into a small number of categories. The first is breach of restrictive covenant: the title contains a covenant restricting the use of the land (for example, no business use, no further building) and the seller has done something that may breach it without a recorded consent from the person with the benefit of the covenant.
The second is missing planning or building regulations consents: an extension was added, a loft was converted, or windows were replaced without obtaining the relevant approval, and so much time has passed that enforcement is unlikely but not impossible. The policy covers the cost of putting matters right and any loss of value if enforcement action is brought.
Other examples include lack of an easement (such as a right of way or right to run services), unknown rights of common, chancel repair liability for older properties near certain churches, lack of "good and marketable title" in unusual cases, missing original deeds, and adverse possession claims that have not been formally settled. Each policy is drafted for the specific risk identified in the conveyancing.
How an indemnity policy is arranged
Indemnity policies are usually arranged by one of the solicitors (typically the seller's solicitor) through a specialist indemnity insurer. The solicitor completes a proposal form, which sets out the property, the defect, the value of the transaction, and the cover required. The insurer issues the policy on standard terms.
The conveyancing process is usually straightforward: once both parties have agreed (in writing, through their solicitors) that an indemnity policy is the right way to handle the issue, the solicitor obtains a quotation, the buyer or seller pays the premium (the question of who pays is negotiated), and the policy document is produced before completion. The policy goes into the buyer's title pack alongside the other completion documents.
Some lenders publish their requirements on indemnity policies in their CML or UK Finance Lenders' Handbook entries. The lender's solicitor will check that the policy meets those requirements before completion. If it does not, the lender may decline to lend or may require a different policy.
What an indemnity policy typically costs
Premiums for residential indemnity policies are usually modest. Many straightforward residential policies cost from a few tens of pounds to a few hundred pounds, depending on the property value and the type of risk being covered. A simple "lack of building regulations consent" policy on a modest extension might be at the lower end, while a "breach of restrictive covenant" policy on a high-value property might be at the higher end.
Cover levels are usually expressed as a multiple of the property's value or a fixed sum, often the full market value of the property. The policy limit is what the insurer would pay out in total, including legal costs of defending or settling a claim.
Premiums are paid once for the life of the policy. There are no annual renewals and no further premiums to collect. The policy is treated as a one-off transactional cost in the conveyancing budget.
When an indemnity policy is not appropriate
Indemnity policies are useful where the underlying defect is small, the cost of curing it is large or impractical, and there is no specific reason to think the risk is about to crystallise. They are not appropriate in some scenarios.
If the defect can be practically cured (for example, by submitting a retrospective planning application, obtaining a deed of variation from the person with the benefit of the covenant, or obtaining a deed of easement), the cure is usually preferred to insurance. Once the cure is in place, the defect is gone permanently.
Crucially, an indemnity policy is voided if the proposer has approached the third party with the benefit of the covenant or right (or the local planning authority) about the defect. Insurers will refuse to issue a policy where contact has already been made, and any existing policy will not pay out if such contact happens during its life. That is why solicitors advise strongly against contacting the freeholder, neighbour or council without first considering whether an indemnity policy is needed.
Indemnity policies in commercial and unusual transactions
Indemnity policies are not limited to standard residential conveyancing. They are used in commercial property transactions, in development sites where a defect threatens a planned scheme, in probate sales where missing documents complicate the position, and in unregistered land transactions where the chain of title has gaps. Specialist insurers offer bespoke policies for these scenarios with higher premiums reflecting the increased risk and value at stake.
For development sites, particularly where significant value depends on a planning permission or the absence of a particular covenant restriction, an indemnity policy is a common tool. The premium can be substantial in absolute terms but is usually a small fraction of the development value.
Title insurance products from US insurers operate on related principles but cover a wider range of title risks under a single policy. The UK indemnity market is generally narrower and more risk-specific than the typical US title insurance market.
Disclaimer: This article is general information about indemnity policies used in property transactions. It is not legal, conveyancing or insurance advice. Whether an indemnity policy is appropriate in a particular transaction, what cover is needed, and which insurer should be used, are decisions for the conveyancing solicitor advising the parties. Anyone in a transaction involving a title defect should take professional advice from a solicitor or licensed conveyancer.
Frequently asked questions
Who pays for the indemnity policy?
The question of who pays is negotiated between the parties, but in practice the seller often pays where the defect arises out of something the seller did or out of the state of the title at the time of sale. The policy itself is taken in the name of the buyer and any lender, and transfers to future owners.
Can the indemnity policy be passed to a future buyer?
Yes. Most indemnity policies in residential conveyancing are written to extend automatically to future owners and lenders, without further premium. The policy document is held with the title deeds and passed to the new buyer's solicitor on a future sale.
Will the lender always accept an indemnity policy?
Most major UK mortgage lenders accept indemnity policies for the standard residential title risks, subject to their published requirements in the UK Finance Lenders' Handbook entry. Some lenders impose specific conditions (minimum cover, particular insurers, scope of cover). The conveyancing solicitor checks the lender's position before relying on the policy.
Why must I avoid contacting the council or neighbour about the defect?
Indemnity insurers underwrite on the assumption that the third party with the benefit of the right or covenant is not aware of the defect. Once contact is made (or the local planning authority is approached about a missing consent) the risk is no longer dormant, and the insurer will not issue a policy. Existing policies generally exclude losses arising after such contact.
How long does an indemnity policy last?
An indemnity policy in residential conveyancing typically lasts indefinitely. There are no annual renewals to keep up. Cover continues for as long as the policy is in force and applies to successive owners until the limit of indemnity is exhausted or the policy is cancelled.
How we verified this
The role of indemnity policies in conveyancing, the typical risks covered and the requirement that no contact should be made with the third party with the benefit of the right or covenant reflect standard professional practice as described in the Law Society practice notes and in the UK Finance Lenders' Handbook. The general framework of insurance contracts is governed by the Consumer Insurance (Disclosure and Representations) Act 2012 and the Insurance Act 2015. Specific terms vary between insurers and policies and should be reviewed in the policy document by the conveyancing solicitor. Premium ranges referenced are descriptive of common residential pricing; commercial and development premiums vary more widely.
