An indemnity policy, or indemnity insurance, is a protection policy that covers the costs of a third party making a claim in relation to a particular defect affecting the property you’re going to buy. It gives you protection against a specific issue with a property that’s likely to cost you in the future.

If the seller is missing an important document when you’re buying a property, then you could get an indemnity policy to cover any potential costs that could occur as a result of not having the document.

Benefits of Indemnity Insurance

An indemnity policy is essentially a way of quickly rectifying an issue with a property. It will give you an efficient, and often cheaper, outcome than chasing a third party to help you reach a solution. It’s worth considering getting an indemnity policy if there’s an issue with your property that’s potentially very expensive.

Common Indemnity Insurance Policies

You can get indemnity insurance for a variety of risks, but the most common policies relate to a lack of Building Regulations or Planning Permission. These policies are designed to cover the cost of necessary works that may be required if the Local Authority serve an enforcement order. Here are some other examples of common indemnity policies:

  • Missing information: when an important document like a building regulation certificate can’t be provided when you buy a property, you can get an indemnity policy for missing information.
  • Absence of easement: if there are no legal rights of way present at a property, then you should get an absence of easement.
  • Restrictive covenant: this is required when the title of the property contains a restrictive covenant that’s been breached.

How Much Does an Indemnity Policy Cost?

The cost of an indemnity policy depends on the value of the property and what the policy is going to cover. On average, you’re looking at spending between £20 to £300 depending on the issue that the policy covers. It will cost more to get a policy that covers building work that’s been completed without the right documentation than it would to cover a risk of chancel repairs.