Legal indemnity insurance basically provides financial protection to a purchaser, seller and lender against the possibility of financial loss or third-party claim arising from any shortcoming in the conveyance. Since you have been recommended to take out this cover, it suggests that your solicitor has identified a potential problem.

Indemnity policies can cover a whole range of legal irregularities that are usually low risk and either can’t be resolved or would be very costly/time consuming to do so - cases involving a possessory title, lost or poorly-worded legal documents, issues of access, lack of planning permission or building regulations certification, etc.

Policies can also cover losses or claims arising from more unusual legal anomalies or risks involving flying freeholds, rights of light, restrictive covenants, chancel repairs, properties on unmade roads, and absent freeholders, for instance.

If it is possible to solve the underlying problem then it’s always best to do so, of course, but if this simply isn’t an option then the legal indemnity insurance mitigates the risk of any future legal challenges and enables the transaction to proceed in the normal way.

Once it is arranged and paid for, indemnity cover runs in perpetuity so can be transferred from owner to owner. It benefits the seller as well as the buyer, so there is an argument for each of them to pay the premium.

However, taking out a policy will undoubtedly minimise the timescale of the conveyancing process for your sale, so it’d be advantageous to get it in place sooner rather than later. The cost varies depending on the policy, but cover typically costs between £20 and £300.

If you’d like any more information, or you’d like to discuss specifics, call us on 01392 204800.