Defective title indemnity insurance is a one-off insurance policy used in property transactions to protect against financial loss caused by a legal defect in a property’s title that cannot easily or quickly be fixed.
It is very common in conveyancing across England and Wales when a solicitor or lender identifies a title problem but still wants the transaction to proceed.
What it typically covers
The policy may cover:
- Reduction in the property’s value
- Legal costs defending a claim
- Compensation payable to third parties
- Costs arising from enforcement action
- Mortgage lender losses
Examples of issues commonly insured:
- Missing easements/right of way
- Breach of restrictive covenant
- Missing planning/building regulation consent
- Lost title deeds
- Unknown rights over the land
- Chancel repair liability
- Absent landlord issues
- Defective leases
What it does not do
It usually does not:
- Fix the legal defect itself
- Cover problems you already caused after purchase
- Cover issues disclosed to third parties after the policy is taken out
- Cover fraud by the insured
A key point: many policies become invalid if you contact the third party who could enforce the defect (for example, asking a neighbour for retrospective consent after insurance is arranged).
Who pays?
Usually negotiated during conveyancing:
- Sellers often pay if they caused or knew about the issue
- Buyers sometimes pay to keep the deal moving
- Sometimes split between parties
How much does it cost?
Typically:
- Around £50–£500 for ordinary residential issues
- More for high-value properties or serious risks
- Usually a one-time premium with perpetual cover
Who is covered?
Policies normally protect:
- The buyer
- Future owners
- Mortgage lenders
Common UK insurers/providers
Policies are often arranged through specialist legal indemnity insurers such as:
