Indemnity Insurance of Obstruction of Access Bank conveyancing obligations
Skipton and Santander, in common with most banks, have their own specific instructions when it comes to obstruction of access indemnity insurance. The content herein aims to help residential conveyancing firms on the various bank approved list of panel lawyers where the title for the the property to be mortgaged incorporates obstruction of access. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Virgin Money, Yorkshire Building Society or Bank of Scotland. The information on this page is not focused on obstruction of access indemnity insurance requirements.
Need help with obstruction of access indemnity insurance from your lender?
RBS and Coventry BS as with many mortgage companies, requirements are that where obstruction of access indemnity insurance is effected:
- the minimum level of cover for the policy must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- the obstruction of access indemnity insurance policy should not incorporate terms which you know would void or prejudice the interests of the bank
- the obstruction of access indemnity insurance policy should always be in favor of the lender and, wherever possible, in favour of the mortgagor and any future owner or lender. If the borrower will not be protected by the obstruction of access indemnity insurance policy, you must advise the mortgagor of this fact.
- the obstruction of access indemnity insurance policy should be placed on risk at no cost to the mortgage company
- you is duty bound to explain to the mortgagor that the borrower is obliged to comply with any conditions of the obstruction of access indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the policy
- your practice are responsible for approving the terms of the obstruction of access policy on behalf of the bank
- your firm must disclose to the insurer all relevant information which you have acquired
- your practice must supply a duplicate of the obstruction of access indemnity insurance to the mortgagor and explain to the mortgagor why the obstruction of access indemnity insurance policy was effected and that additional insurance might be required if there is additional lending against the security of the property
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Adam & Company | The open market value of the property according to the valuation report. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| ITL Mortgages | Minimum of the value of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS- First Active | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Zephyr Mortgages | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Obstruction of Access Contingency Insurance : Reflections
The extent of the terms for obstruction of access indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners should point your non-lender client to the obstruction of access indemnity insurance policy itself. Obstruction of Access Contingency insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so you should check any draft to determine that it is in order. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Important characteristics and benefits of obstruction of access indemnity insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the obstruction of access indemnity insurance schedule. Obstruction of Access indemnity insurance Policies are likely to cover the following- Loss in market value resulting from the successful enforcement of the risks specified in the obstruction of access insurance.
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the obstruction of access policy.
- The cost of altering or destroying 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.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the obstruction of access policy, to the extent that such costs are rendered abortive by court decision.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Cover for compensation incurred in any proceedings concerning the risks specified in the obstruction of access policy, including incurred costs and expenses.
Don't forget to check what is not included in the obstruction of access insurance e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Are legal costs covered?
Obstruction of Access Indemnity Insurance has limitations - Supplemental considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from obstruction of access insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 obstruction of access Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above is in relation to properties in England and Wales.