I've taken out such policies many times in the past, Rebelboy. It's really becoming much more common now. Everyone is going to some ridiculous lengths to cover themselves......... especially lawyers and surveyors.
The theory is, that someone or something could crawl out of the woodwork, register an interest, and cause problems. Although exactly how the risk would manifest itself is just about impossible to conceive.
In fact, with Planning Permission, action cannot be taken after a period of four years has elapsed. Building Regulations is different. There is no official time limit.
You could apply to the Council for a "certificate of Lawfulness", but this would cost more than the policy, and still doesn't address the Building Regs position.
Not so many years ago, no Solicitor would even worry about this "historic" detail. Many people, if put in this situation, would tell the purchasers to get on with the purchase without the Indemnity. It's your decision entirely. They could always arrange their own cover if they were concerned.