Legal & Tenure

What Does Indemnity Insurance Cover in a Property Transaction

Property indemnity insurance protects buyers, sellers, and lenders against specific legal risks that arise during conveyancing, from missing building regulations to breach of restrictive covenants. Understanding what it does and does not cover is essential before relying on it.

Published: 20 Feb 2026 · Updated: 16 Mar 2026 · 6 min read

#PropertyLaw#UKConveyancing#IndemnityInsurance#PropertyTitle#PropertyPassportUK

What is Property Indemnity Insurance?

Property indemnity insurance (sometimes called title indemnity insurance) is a specialist one-off insurance product used in conveyancing to protect buyers, sellers, and mortgage lenders against specific legal risks identified during a transaction. It does not remove the risk, it provides financial protection if the risk materialises.

Policies are purchased for a one-off premium and run with the property, covering the current owner, future owners, and mortgage lenders.

When is Indemnity Insurance Used?

Risk Identified	Type of Policy
Works carried out without building regulations approval	Building regulations indemnity
Planning permission not obtained or conditions not met	Planning indemnity
Restrictive covenant that may be breached	Restrictive covenant indemnity
Flying freehold without mutual obligations	Flying freehold indemnity
Title deeds lost or incomplete	Missing title deeds indemnity
Chancel repair liability	Chancel repair indemnity
Lack of formal right of access	Access and rights of way indemnity

What Does a Policy Actually Cover?

A policy typically covers the insured against:

**Financial loss** directly arising from enforcement of the relevant risk
**Legal costs** incurred in defending a claim or enforcement action
**Reduction in market value** caused by the risk materialising

What policies do **not** cover:

They do not remedy the underlying defect
They generally do not cover circumstances where the risk was already being actively pursued before the policy was taken out
They will not cover the insured's own actions after the policy date

Building Regulations Indemnity: A Common Example

Where works have been carried out without local authority building regulations sign-off, a policy protects the buyer and lender against an enforcement notice requiring rectification.

**Crucially:** speaking to the local authority about the missing approval before a policy is in place will typically void the policy. Do not contact the council yourself before taking legal advice.

How Much Does It Cost?

Premiums are almost always a one-off payment, typically between £150 and £600 for a straightforward residential risk. More complex or high-value risks can be significantly more expensive. Premiums are based on property value, nature of the risk, and whether the risk is recent or historical.

Key Limitations

**It does not make the title perfect.** A building without sign-off remains technically non-compliant.
**It does not cover wilful breach.** If you knowingly breach a restrictive covenant after taking out a policy, you will not be covered.
**Some lenders will not accept it.** Niche lenders may have stricter requirements.

Always have your solicitor review any policy before accepting it. Reviewing a property's documented history through Property Passport UK before a transaction can help flag potential indemnity requirements early.