Conveyancing - Ways to sell
4 min read
When buying or selling a house, your conveyancer may recommend for you get indemnity insurance. Here, we will explain what indemnity insurance is in property transactions, why and when you may need it.
 "What is property indemnity insurance? | MHMC (2)")
 "What is property indemnity insurance? | MHMC (3)")
 "What is property indemnity insurance? | MHMC (5)")
 "What is property indemnity insurance? | MHMC (6)")
Indemnity insurance FAQs
Does the buyer or seller pay for the insurance?
It’s usually negotiated between the buyer’s and seller’s solicitors as to who should pay for the indemnity insurance. If it’s a defect caused by the seller, or they haven’t been able to provide certain information, they may be willing to pay. However, if it’s a defect that has been in place for a while, it may fall on the buyer to pay for the insurance, as it will ultimately be their risk going forward. Alternatively, in some cases the buyer and seller may share the cost.
Either way, your conveyancerwill help to advise you on the best thing to do for you.
Does indemnity insurance gets passed from seller to buyer?
Yes. Any indemnity insurance purchased is for the property, not for the person. Therefore, if you’re selling a property which already has an indemnity insurance policy, it will transfer to the new owner upon completion. The only caveat is that if the property’s value has increased since the indemnity insurance was bought, there may be an additional premium to pay to increase the cover.
Does indemnity insurance reduce the need for conveyancing searches?
No. Indemnity insurance should only be used as a safety net, rather than a replacement to the conveyancing searchesyou will get as part of the standard conveyancing process. Indemnity insurance covers legal and compensation costs, however the cost to fix the issue if needed will be on the homeowner, therefore when buying a property, you should be aware of as many potential issues as possible before the sale becomes legally binding.
Is it worth getting indemnity insurance?
Ultimately, this is something only you will be able to answer, depending on what the defect or issue is and how much of a risk it is to you. If you are unsure whether you need indemnity insurance, these are some factors you should consider:
Getting it means that you will always be financially protected against the issue
Your mortgage provider may insist it is needed
Will it make this sale, or a future sale, go through easier?
The upfront cost now vs the potential future costs
Could it be easily resolved without getting the insurance?
The likelihood of this issue being raised in the future
How long does it take to get indemnity insurance?
Unless it is an extremely complicated case, getting the insurance doesn’t usually take very long, just a couple of days.
