We are interested in detecting homologous genomic DNA sequences with the goal of locating approximate inverted, interspersed, and tandem repeats. Standard search techniques start by detecting small matching parts, called seeds, between a query sequence and database sequences. Contiguous seed models have existed for many years. Recently, spaced seeds were shown to be more sensitive than contiguous seeds without increasing the random hit rate. To determine the superiority of one seed model over another, a model of homologous sequence alignment must be chosen. Previous studies evaluating spaced and contiguous seeds have assumed that matches and mismatches occur within these alignments, but not insertions and deletions (indels). This is perhaps appropriate when searching for protein coding sequences (<5% of the human genome), but is inappropriate when looking for repeats in the majority of genomic sequence where indels are common. In this paper, we assume a model of homologous sequence alignment which includes indels and we describe a new seed model, called indel seeds, which explicitly allows indels. We present a waiting time formula for computing the sensitivity of an indel seed and show that indel seeds significantly outperform contiguous and spaced seeds when homologies include indels. We discuss the practical aspect of using indel seeds and finally we present results from a search for inverted repeats in the dog genome using both indel and spaced seeds.