Everything you need to know about indemnity insurance

What is indemnity insurance?

Indemnity insurance covers you when unexpected damages (omitted in property or electrical reports) surface. Therefore, considering indemnity insurance is a good idea if you want to avoid hefty bills if your new home reveals unpleasant surprises.

While not mandatory, investing in indemnity insurance can be financially and mentally reassuring.

Before securing indemnity insurance, you need reports from a building surveyor. While IDA Forsikring doesn't offer it, our reliable partner Gjensidige Forsikring does.

Get your quote here.

What is the difference between indemnity insurance and building insurance?

Building insurance covers damages that occur after you've taken over the house – like those from storms or heavy rain.

In contrast, indemnity insurance addresses pre-existing issues, such as illegal plumbing or electrical installations that were present before you bought the property.

How am I covered with indemnity insurance?

Indemnity insurance covers damages, hidden defects, and issues existing in the property before your ownership. You are only covered if the damages are not detailed or accurately described in the property or electrical installation reports. 

Here are examples of hidden damages you can expect to be covered:

• Breakage
• Leakage
• Deformation
• Cracks and crack formation
• Missing building parts
• Illegal electrical and plumbing installations
• Physical conditions that reduce the value or usability of the property
• Conditions that pose a significant risk of damage

What are hidden damages?

Hidden damages refer to issues not detailed in the property or electrical installation report.

Indemnity insurance is a valuable investment as it covers unforeseen hidden damages. Without it, you would be responsible for covering the expenses of fixing these hidden damages on your own.

Will I get coverage for all hidden defects not mentioned in the condition report?

To be eligible for coverage, damages must be absent or inaccurately described in the condition report. However, it's important to note that the insurance doesn't automatically cover all hidden damages omitted in the report.

Coverage applies to hidden damages that result in a defect or pose a substantial risk of diminishing the value or functionality of the building compared to similar structures of the same age and condition.

What does indemnity insurance not cover?

While indemnity insurance offers valuable coverage, it's essential to understand its limitations. Here are aspects not covered by indemnity insurance:

• Damages that occur after signing the purchase agreement.
• Defects, damages, or issues outlined in the property or electrical installation report.
• Normal wear and tear.
• Moisture in the basements of older houses.
• Minor defects that don't significantly impact property value or usability.
• Visible defects and issues.

Are there differences between indemnity insurance policies?

Fundamentally, all insurance providers offer the same foundational coverage for indemnity insurance, as dictated by the Danish Parliament. Whether you opt for a five- or ten-year plan, this coverage remains consistent.

However, certain companies may provide supplementary coverage options for indemnity insurance.

How long does indemnity insurance last?

You have the flexibility to select coverage for either five or ten years. If you initially opt for a five-year insurance plan but later reconsider, you can extend it to ten years. You must do this at least five days before the expiration of the initial five-year agreement.

It is cheaper for you to choose a ten-year coverage from the get-go instead of extending it later.

How much does indemnity insurance cost?

The price of insurance depends on the size and age of the property. The seller covers half of the insurance expense. Usually, the real estate agent will present an offer. Should you, as a homebuyer, opt for a more expensive indemnity insurance policy, the seller is only responsible for half of the real estate agent's proposed cost.

If you’re looking for comprehensive insurance at reasonable prices, you can get a quote from our partner, Gjensidige Forsikring.

Is indemnity insurance beneficial for both seller and buyer?

Both the buyer and seller can benefit from purchasing indemnity insurance.

Benefits for the seller

If you sell your house, you remain liable for damages for up to ten years. Even after selling, you might be responsible for repairing hidden damages. However, by mutually agreeing with the buyer to invest in indemnity insurance, you can avoid being burdened with these costs. 

It's crucial to secure the insurance before signing the purchase agreement.

Benefits for the buyer

As a homebuyer, indemnity insurance provides compensation if you uncover hidden damages and defects not outlined in the condition report. It acts as your financial safety net, ensuring you won't be left to cover the entire repair bill.