What is indemnity insurance?

You've just bought your dream home, but what if defects arise after inspections?

Red brick house with green hedge
Any damage to a property can result in significant costs, which is why it's essential to consider indemnity insurance that covers hidden defects.Although not mandatory, purchasing indemnity insurance is often a wise decision for both the buyer and seller. To be eligible for this insurance, a building expert must create a home condition report and an electrical installation report. These reports provide a written assessment and review of the electrical installations, giving the buyer a clear understanding of the house's overall condition and any visible damage or signs of wear.

What does indemnity insurance cover?

Before taking over the property, the insurance covers any damage, hidden faults, and deficiencies. However, it is essential to note that the fissures or ruptures should not have been listed in the home condition or electrical installations report. If they have been recorded, the insurance will not apply. It is also necessary to ensure that any existing fissures, ruptures and other issues have been correctly described in the reports.Examples of typical damage that is covered:
  • Breaks
  • Leaks
  • Deformation
  • Cracks and crack formation
  • Missing building parts
  • Illegal electrical installations
  • Physical conditions that reduce the value or usability of the property
  • Situations that risk causing damage

Benefits for both buyer and seller

Both the buyer and seller can benefit from this insurance:


As the buyer, if you discover any damage absent in the home condition or electrical installation report, you have the right to file a claim with the insurance company. Without insurance, the responsibility for any pre-existing damage or faults in the property falls on you. Ideally, the seller should take care of any damage before you take over the property. However, determining whether the issue occurred before or after the sales papers were signed can be complicated.


You are responsible for any damage, faults, or deficiencies for the next ten years when you sell your house. It means that even though you have already sold your home, you are still financially responsible for fixing any issues that may arise. However, you can avoid paying for officially unregistered damages if you and the buyer agree to purchase indemnity insurance.

What does indemnity insurance NOT cover?

Indemnity cover can vary from insurer to insurer, but typically, it does not cover certain things such as:
  • Damage or deficiencies that occur after you have signed the purchase agreement.
  • Wear and tear. 
  • Damp in the cellar of older houses. 
  • Minor faults that do not significantly impact the value or usability of the property.
  • Visible flaws and deficiencies. 
  • Defects, imperfections, or damages present in the home condition and electrical installation reports.

How long does indemnity insurance cover me?

You have the option to select insurance coverage for either five or ten years. If you choose the shorter insurance coverage, you can extend it later if you change your mind. However, if you decide to prolong the five-year term, you must do so within five days of the insurance expiring at the latest.

What does indemnity insurance cost?

Indemnity insurance costs vary from one insurer to another and depend on the property's size and age. The seller is responsible for paying half of the insurance cost. Typically, the estate agent recommends where to purchase insurance, but the buyer can choose a different company. However, the seller must only pay half of the initially quoted price of the insurance the estate agent offers.


Indemnity Insurance

Learn about the essential coverage aspects of IDA Forsikring's Indemnity Insurance through an overview.

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