Has your solicitor told you to get indemnity insurance when selling a house?
Are you considering putting your house on the market or already in the process of selling? If so, you may have been advised to purchase home indemnity insurance.
This is a term that is unique to the property industry, and you might be wondering if you need it.
This article will explain what indemnity insurance is, what it covers, how much it costs, and if you need it.
You will have all the information you need to make an informed decision by the end.
Table of Contents
What Is Indemnity Insurance?
Indemnity insurance is a policy that compensates the insured party for certain unexpected damages or losses up to a specified limit. When selling a house, this insurance protects against potential legal claims or financial losses related to property defects or missing documentation.
Do I need indemnity insurance when selling a house?
You may need indemnity insurance when selling a house if there are unresolved issues with the property that could lead to future legal problems or financial losses. Your solicitor can advise whether it’s necessary based on your specific circumstances.
What does indemnity insurance cover?
Indemnity insurance can cover a wide range of issues, including:
- Missing building regulations or planning permissions
- Lack of right of way or access
- Restrictive covenants
- Chancel liability insurance
- Title defects
- Absence of FENSA certificates for windows and doors
How much does indemnity insurance cost?
The cost of indemnity insurance varies depending on the type of policy and the value of the property. Prices typically range from £20 to £300 for standard policies, but can be higher for more complex issues.
Who pays for indemnity insurance?
The responsibility for paying for indemnity insurance is often negotiable between the buyer and seller. In many cases, the seller pays for the policy as they are selling a property with potential issues. However, this can vary depending on the specific situation and agreement between parties.
Can indemnity insurance be transferred to new owners?
Yes, indemnity insurance policies are typically tied to the property rather than the individual. This means the policy can be transferred to new owners when the property is sold, providing ongoing protection.
What is subsidence indemnity insurance?
Subsidence indemnity insurance is a specific type of policy that protects against potential losses due to structural movement or instability of the property. This can be particularly important in areas prone to subsidence or if the property has a history of movement.
| Type of Indemnity Insurance | Common Uses |
|---|---|
| Planning Permission | Covers unauthorised alterations or extensions |
| Building Regulations | Protects against non-compliance with building standards |
| Restrictive Covenants | Insures against breaches of property restrictions |
| Chancel Liability Insurance | Covers potential church repair costs |
| Title Defects | Protects against issues with property ownership |
What are the benefits of indemnity insurance when selling a house?
- Speeds up the sale process
- Provides peace of mind to buyers
- Covers potential legal costs and compensation
- Can resolve issues that would otherwise delay or prevent a sale
- Often more cost-effective than rectifying the underlying problem
Are there any alternatives to indemnity insurance?
In some cases, you may be able to resolve the underlying issue instead of purchasing indemnity insurance. This could involve:
- Obtaining retrospective planning permission
- Securing missing documentation
- Negotiating with relevant parties to resolve covenant issues
However, these alternatives may be more time-consuming and potentially more expensive than indemnity insurance.
How long does indemnity insurance last?
Indemnity insurance policies typically provide indefinite cover, lasting for the entire period of ownership and often transferring to subsequent owners. This long-term protection is one of the key advantages of indemnity insurance.
Can I sell my house without indemnity insurance?
You can sell your house without indemnity insurance, but it may make the sale process more difficult if there are unresolved issues with the property. Some buyers or their mortgage lenders may insist on indemnity insurance before proceeding with the purchase.
How do I obtain indemnity insurance?
To obtain indemnity insurance:
- Identify the specific risk or issue that needs coverage
- Consult with your solicitor or a specialist insurance broker
- Obtain quotes from multiple insurance providers
- Compare policy terms, coverage, and premiums
- Select and purchase the most suitable policy
- Provide policy details to all parties involved in the sale
What should I consider when choosing indemnity insurance?
When selecting an indemnity insurance policy, consider:
- The reputation and financial stability of the insurance provider
- The extent of coverage and policy limits
- Any exclusions or limitations in the policy
- The cost of the premium compared to the level of protection offered
- Whether the policy can be transferred to future owners
Can indemnity insurance affect the value of my property?
Indemnity insurance typically does not directly affect the value of your property. However, it can make your property more attractive to potential buyers by providing protection against known issues, potentially speeding up the sale process.
Indemnity when selling a house: Key considerations
When considering indemnity insurance for your property sale, keep these points in mind:
- Policy duration: Most indemnity policies offer indefinite cover
- Transferability: Policies can usually be passed on to future owners
- Cost vs. benefit: Weigh the premium against potential future claims
- Disclosure: Be transparent about known issues to ensure valid coverage
- Alternatives: Consider resolving underlying issues if feasible and cost-effective
Indemnity insurance selling house: Cost factors
The cost of indemnity insurance varies based on several factors:
| Factor | Impact on Cost |
|---|---|
| Property value | Higher value typically means higher premiums |
| Type of risk covered | More serious issues often cost more to insure |
| Policy limit | Higher coverage limits increase premiums |
| Property location | Some areas may have higher risk profiles |
| Insurance provider | Rates can vary between companies |
Do I need indemnity insurance when selling a house: Pros & cons
Pros:
• Speeds up the sale process
• Provides peace of mind to buyers
• Covers potential legal costs and compensation
• Often more cost-effective than rectifying underlying problems
• Can resolve issues that would otherwise delay or prevent a sale
Cons:
• Additional cost to the transaction
• May not cover all potential risks
• Could be seen as a ‘quick fix’ rather than addressing root issues
• Some buyers may prefer problems to be resolved rather than insured against
Useful tips for indemnity insurance in property sales
- Always disclose known issues to your insurer to ensure valid coverage
- Keep policy documents safe and pass them on to new owners
- Consider bundling multiple indemnity policies for cost savings
- Review policy terms carefully to understand any exclusions or limitations
- Don’t assume all risks can be covered by indemnity insurance; some issues may need to be resolved directly
Property Saviour: Your Solution for Unresolvable Property Issues
At Property Saviour, we specialise in buying properties with challenging issues, including those that can’t secure indemnity insurance. We offer a straightforward, hassle-free process to purchase your property quickly, regardless of its condition or legal complications.
Unlike estate agents, we don’t need to find external buyers or rely on mortgage lenders. We buy directly with our own funds, allowing us to complete purchases swiftly, often within 10 days or at a timescale that suits you.
Don’t let the lack of indemnity insurance hold you back from moving on. Contact Property Saviour today for a no-obligation cash offer on your property. Request a callback now, and let us show you how we can solve your property selling challenges.
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
