Indemnity Insurance When Selling a House: What Happens (2026)
- What is indemnity insurance?
- What actually happens to the policy when you sell?
- Common types of property indemnity insurance
- How much does indemnity insurance cost when selling?
- Who pays for indemnity insurance — buyer or seller?
- The golden rule: do not contact the authority
- Indemnity insurance vs fixing the problem
- How quickly can a policy be arranged?
- Who does indemnity insurance suit — and who should fix it instead?
- A note on Scotland
- Selling fast when title issues keep stalling a sale
- The bottom line on indemnity insurance when selling
What is indemnity insurance?
Indemnity insurance is a one-off insurance policy that protects against the financial consequences of a specific legal or title defect in a property — something that cannot easily be fixed with paperwork. Rather than curing the underlying problem, it pays out if that problem ever causes a loss, such as a third party enforcing a right or an authority taking action. It is a common, low-cost tool that keeps sales moving when a search throws up a historic issue.
Typical examples include a missing building-regulations or FENSA certificate for past works, a lack of planning permission, a restrictive covenant on the title, chancel repair liability, or an absent freeholder. In each case the defect may never cause a problem — but a buyer, and especially their mortgage lender, wants protection in case it does. For the wider checklist of documents a sale needs, see what paperwork you need to sell your house.
What actually happens to the policy when you sell?
This is the core question, and the answer is reassuring. A property indemnity policy is written to benefit not just the current owner but their successors in title and any mortgage lender. That means when you sell, the existing policy simply carries on, now protecting the new owner. There is no need to cancel and re-buy, no renewal date, and in almost all cases no fee to transfer the benefit of the cover. Your solicitor hands the policy document to the buyer's solicitor as part of the legal pack.
There is one common exception. If the property's value has risen significantly since the policy was taken out, the original cover limit may no longer be enough, and the buyer may ask for a top-up premium to raise the indemnity limit to the current value. That is usually a small additional cost rather than a brand-new policy. The table below summarises the main scenarios you will meet.
| Scenario at point of sale | What happens | Typical cost to you |
|---|---|---|
| Valid policy already in place | Transfers to buyer and lender on completion | Usually nothing |
| Policy exists but cover limit now too low | Buyer may request a top-up to current value | Small top-up premium |
| No policy, but a defect surfaces in searches | Seller usually buys a one-off policy before completion | One-off premium (often seller pays) |
| Defect can be cured properly instead | Fix it (e.g. obtain the certificate) — no policy needed | Cost of the remedy |
Key takeaways
- An existing indemnity policy transfers to the buyer automatically on completion.
- There is normally no transfer fee — the cover is a one-off purchase that lasts in perpetuity.
- A top-up premium may apply if the property value has risen above the original cover limit.
- If no policy exists and a defect appears, the seller is usually asked to buy one.
- Never contact the council or authority about the defect — it can invalidate the policy.
Common types of property indemnity insurance
Policies are tailored to the specific defect, so the name of the policy tells you what it covers. The most common types you will encounter in 2026 include the following.
- Building regulations / FENSA indemnity — for past works (windows, extensions, electrics) without the proper completion certificate.
- Lack of planning permission — where an alteration or building was carried out without consent.
- Restrictive covenant — protects against a third party enforcing an old restriction on the title.
- Chancel repair liability — covers an ancient liability to contribute to local church repairs.
- Absent landlord / missing freeholder — where the freeholder of a flat cannot be traced.
- Restrictive covenant and breach of easement — for rights of way or access issues on the title.
How much does indemnity insurance cost when selling?
Indemnity insurance is one of the cheaper hurdles in a sale. Premiums are a single one-off payment with nothing to renew, and the cost is driven by two things: the value of the property and the level of risk the policy has to cover. Minor issues — a missing window certificate, for example — can cost as little as around £12 to a few tens of pounds. More serious risks, such as a lack of planning permission, run higher. As a broad guide, most residential policies fall somewhere in the £20 to £300 range, though unusual or high-value risks can cost more.
| Type of policy | Indicative one-off cost (2026) |
|---|---|
| Missing FENSA / building-regs certificate | ~£12-£100 |
| Restrictive covenant | ~£50-£200 |
| Chancel repair liability | ~£20-£100 |
| Lack of planning permission | ~£100-£300+ |
| Absent freeholder / unusual title risk | Varies — often £100+ |
Who pays for indemnity insurance — buyer or seller?
In most cases the seller pays. The logic is straightforward: the defect arose under the seller's ownership (or a previous owner's), and it is the seller who needs to satisfy the buyer in order to complete. When a search reveals a problem the seller cannot cure with documents, taking out an indemnity policy is the quickest and cheapest way to keep the sale alive, so the seller usually picks up the modest premium. That said, who pays is ultimately a point of negotiation — the cost is sometimes split, and occasionally a keen buyer agrees to fund it.
The golden rule: do not contact the authority
There is one critical rule that catches people out. An indemnity policy is only valid on the basis that no one has drawn the defect to the attention of the party who could enforce it. If you, the buyer, or anyone else contacts the local council about the missing planning permission, or approaches the body that could enforce a covenant, you risk invalidating the policy entirely — because you may have prompted the very enforcement action the policy is meant to insure against. Once an authority is aware, insurers will usually refuse cover. So if you are relying on indemnity insurance, leave the sleeping defect undisturbed and let the policy do its job.
Indemnity insurance vs fixing the problem
Indemnity insurance is not always the right answer — it manages risk rather than removing it. The alternative is to cure the defect properly: obtain the missing building-regulations certificate through a regularisation application, apply for retrospective planning permission, or trace and deal with the freeholder. Curing the problem is permanent and removes the issue from all future sales, but it can be slow, uncertain and more expensive, and — crucially — the act of applying can itself rule out the cheaper insurance route. The table below weighs the two.
| Factor | Indemnity insurance | Fixing the defect properly |
|---|---|---|
| Speed | Fast — often arranged in 24-48 hours | Slow — weeks or months |
| Cost | Low one-off premium | Higher; application and works costs |
| Permanence | Manages risk; defect remains | Removes the defect for good |
| Effect on the policy route | N/A | Applying can invalidate insurance option |
How quickly can a policy be arranged?
Speed is one of indemnity insurance's biggest advantages. A solicitor or a specialist provider can usually put a policy in place within 24 to 48 hours, which is why it is so often used to rescue a transaction in its final stages. When a defect surfaces late and the alternative is a delay of weeks to cure it properly, a same-day policy can be the difference between completing on time and the chain stalling.
Who does indemnity insurance suit — and who should fix it instead?
A one-off policy suits sellers who hit a historic, low-probability defect that would take far longer to cure than to insure, and who simply want to complete on schedule. Fixing the defect instead tends to suit owners who are not under time pressure, who plan to stay for years, or where the defect is serious enough that a future buyer or lender will keep raising it. If the underlying problem is making the home hard to sell or mortgage at all, that is a different and bigger issue — see what might be keeping your house from selling.
A note on Scotland
Indemnity insurance works in much the same way across the UK, but Scottish conveyancing has its own framework: title issues are dealt with through the missives and the examination of title, and a property requires a Home Report before it goes on the market. A defect that an indemnity policy would cover in England — a missing building warrant completion certificate, say — is handled by Scottish solicitors in the same spirit: insure the risk to keep the deal moving, or cure it where practical. Whether you need a solicitor for any of this is covered in our guide to selling a house in Scotland.
Selling fast when title issues keep stalling a sale
Sometimes a property carries more than a single insurable defect — unbuilt-over indemnities, missing certificates, an absent freeholder and an awkward title all at once — and traditional buyers and their lenders keep walking away. If your sale keeps stalling on title or paperwork problems, selling through the modern method of auction can sidestep the cycle of failed mortgage offers entirely.
Our pool of more than 11,000 registered buyers includes cash investors comfortable with title quirks that frighten mortgage lenders. When a bid succeeds the buyer commits immediately and pays a non-refundable deposit, secured by our SaleLock Guarantee, with completion typically within 28 days and no agent fees to the seller. See how selling at auction works or get a free valuation in 60 seconds.
The bottom line on indemnity insurance when selling
When you sell, a valid indemnity policy travels with the property to the buyer and their lender, automatically and almost always free of charge — the cover is bought once and lasts in perpetuity. If no policy exists and a defect appears, expect to take one out, usually at the seller's expense and for a modest one-off premium. Keep the policy document safe, hand it over with the legal pack, and never tip off the authority that could enforce the defect. For the full document checklist, see what paperwork you need to sell your house.
Founder & Director of Scotland Property Auction. Julie has spent over a decade helping Scottish homeowners, landlords and executors sell property quickly at auction — covering Home Reports, missives, repossession and the modern method of auction.
More about Julie →✔ Last reviewed June 2026 by Julie McAndrews. We keep our guides current with Scottish property law and market conditions.