Indemnity insurance covers future buyers but only up to the limit of the amount of cover paid for so you might have to upgrade in the future.
It only gives protection against enforcement by the Council, but not against structural failures or other inadequacies of construction - e.g wouldn't pay out if there was a fire and the damage was worse because fire protection measures required by regulations not installed. It is important therefore that you decide whether as far as you are concerned either:
- There is a concern about the quality of the work; or
- You think the work is probably OK but your concern is about hassles etc in selling in the future and the possibility of the Council taking enforcement action.
If the work is more than a year old the possibility of enforcment under building regulations is almost nil, but does theoretically exist.
An indemnity policy is not available if the Council have been contacted about the matter and usually you cannot get them until the work is at least a year old! However these policies are useful in providing comfort to mortgage lenders who do not seem to understand the reality of the position.
As far as planning permission is concerned the extension might have been "permitted development" that did not require consent. Did your solicitor check that?
Again, unless there was a specific condition on the original planning permission for the construction of the house, saying the garage had to retained as such, conversion of a garage into a habitable room is no different from converting a dining room into a bedroom or playroom. So the "change of use" of the garage might not have needed permission.
It should be possible by looking at the original permission and the permitted development rules to establish whether or not any planning permission was required without talking to the Council, except perhaps innocently to ask for a copy of the original permission. If permission is required, then it is question of assessing the risks of enforcement. They are more live
than under building regulations but in general the longer the work has survived without enforcement the sillier the Council will look if it takes any action, and the more likely permisison would be given on an appeal against enforcement action. It is sensible to obtain a lack of planning permisison indemnity to protect against the costs of enforcement and costs of reinstatement if this is necessary.
It is much more diifficult to check whether the work complied with the building regulations because this will require quite a detailed technical knowledge of what is needed and may involve disruptive investgations (e.g. taking plaster off to look at RSJs that have been inserted). Therefore I would tend only to suggest that this is done if you have some real concerns about the quality of the work. You need to bear in mind that people don't in general seem to be very concerned about the construction and safety aspects of older properties e.g. terraced house built 100 years ago with attic bedroom with steep winding stairs to it.
Finally, I would ask your solicitors why they are concerned about the planning (as opposed to Building Regs) point.