If you are a UK resident looking to purchase a new home, you may be wondering how long does indemnity insurance last, what it actually is, and how much it costs.
The sections below answer all of these questions and explain why it’s essential to get a house indemnity insurance to protect your property investment.
Let’s get to business!
An indemnity insurance policy is a type of coverage that homebuyers and homesellers can use as protection against any legal action taken against the property after and during a sale.
For example, if the conveyancing and survey processes discover that the vendor did not have planning permission for a property extension, the buyer or the seller would be protected against any financial losses incurred as a result.
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In most cases, a home indemnity insurance coverage can last for decades or even indefinitely as it’s attached to the property and not the owner. However, if the property’s value increases over time, the owner may be required to pay premiums to maintain coverage.
Note: You will effectively invalidate your indemnity insurance if you reveal any defects covered by the policy to any third-party companies or individuals.
After learning all about the indemnity policy meaning, we should also review the most common risks such insurance coverages protect against:
Note: If the seller refuses to cover the building indemnity insurance, the buyer should get one to avoid unexpected costs in the future or satisfy the requirements of a mortgage. Remember that indemnity insurance is very different from building insurance.
While these types of policies may cover minor and inexpensive risks, you should still obtain indemnity insurance when buying a house or selling any property to avoid potential legal costs and the time and hassle it takes to resolve them.
However, you should purchase such coverage even in the following cases:
Taking out indemnity insurance when selling a house should be your last resort, as you may be able to fix certain minor issues quickly. You can also avoid a value loss in the future by having your property underpinned as a protection against soil changes and house extensions.
Since the indemnity insurance covers the property instead of the owner, it is perfectly transferable in a house sale. Therefore, when selling a house, hand over the coverage documentation to the buyer who will be utilising its protection thereafter.
However, while you can transfer the policy free of charge, the new owner may have to pay additional insurance fees if and when and property value significantly increases.
Note: Sellers can be found liable for the property several years after the sale, provided the buyer discovers a severe issue that results in the house value plummeting.
You shouldn’t worry about covering the indemnity policy cost in the UK, as it’s a one-off payment that generally ranges between £20 to £500, without monthly or annual premiums.
The final price of an indemnity insurance for a house sale will vary based on factors such as:
Note: Consult with your conveyancer or an insurance specialist to get a good policy quote that matches the value and issues of your property.
While neither the seller nor the buyer is legally obliged to get an indemnity policy for a house sale, the party selling the property is expected to do so to expedite the sale.
Ultimately, sellers choose to cover this minor one-time payment over failing to sell the property, as buyers are well within their rights to cancel the transaction at any time.
However, even if the seller avoids paying the coverage bill, new owners should get one as they will have to pay out of pocket for any issues that may arise down the line.
So, there you have it—everything you need to know about property indemnity insurance in the UK. We hope this article was helpful in making your house purchase a worthy investment. If not, check out our other articles on a variety of topics related to personal finance and insurance.
Indemnity insurance is a type of policy that protects the buyer from any financial losses that may arise from issues with the property after purchase, such as various legal defects.
If you’ve learned how long does indemnity insurance last and you think it affects the price of the policy, that’s not the case. In fact, you can buy indemnity insurance in the UK with a one-off payment, so there aren’t any annual premiums that you would need to pay.