Adoption of Road or Sewer Indemnity Insurance Bank conveyancing requirements
Yorkshire Bank Home Loans and Birmingham Midshires, as with many mortgage companies, dictate their own requirements when it comes to adoption of road or sewer indemnity insurance. The content herein aims to help residential conveyancing solicitors on the various mortgage company conveyancing panel where the title for the the property to be mortgaged contains adoption of road or sewer. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Chelsea BS, Accord or Coventry BS. The content on this page Is not to be read as adoption of road or sewer indemnity insurance advice.
Need help with adoption of road or sewer indemnity insurance from your lender?
Nationwide and Yorkshire Building Society like the majority of banks, requirements are that where adoption of road or sewer indemnity insurance is to be put on risk:
- your practice is duty bound to spell out to the mortgagor that the borrower is obliged to adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- your firm must approve the terms of the adoption of road or sewer policy on behalf of the mortgage company
- the adoption of road or sewer indemnity insurance policy should be placed on risk without cost to the lender
- you is required to disclose to the insurer all relevant information which you have acquired
- your practice must send a copy of the adoption of road or sewer indemnity insurance to the mortgagor and explain to the borrower why the adoption of road or sewer indemnity insurance policy was effected and that additional insurance might be required if there is further borrowing against the mortgaged property
- the adoption of road or sewer indemnity insurance policy should not incorporate conditions which you know would void or prejudice the interests of the mortgage company
- the adoption of road or sewer indemnity insurance policy should always be for the benefit of the bank and, if possible, for the benefit of the borrower and any next owner or mortgagee. If the borrower will not be covered by the adoption of road or sewer indemnity insurance policy, the borrower should be informed accordingly.
- the limit of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Bradford & Bingley | Amount of loan + 15% |
| Chelsea Building Society | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Harpenden Building Society | 110% of mortgage advance |
| Intelligent Finance | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| LendInvest | An amount at least equal to the valuation of the property. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Perenna | The higher of the purchase price or valuation. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| RBS- First Active | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for adoption of road or sewer indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners are obliged to point the borrower to the adoption of road or sewer indemnity insurance policy paperwork. Adoption of Road or Sewer Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Adoption of Road or Sewer Contingency insurance: Significant characteristics and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Adoption of Road or Sewer indemnity insurance Cover normally includes- The cost of altering or demolishing all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- Cover for compensation incurred in any proceedings concerning the risks specified in the adoption of road or sewer insurance, as well as solicitors charges.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the adoption of road or sewer policy.
- Expenses for works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the adoption of road or sewer insurance, to the extent that such costs are rendered abortive by court order.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Diminution in value resulting from the successful enforcement of the risks specified in the adoption of road or sewer indemnity insurance.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the adoption of road or sewer policy will not be valid.
Adoption of Road or Sewer Indemnity Insurance has limitations - Additional considerations
There may be consequences arising from the enforcement of the risks identified in the adoption of road or sewer insurance which are not adequately covered by financial compensation. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most adoption of road or sewer Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.