Obstruction of Access Indemnity Insurance Lender conveyancing requirements
Birmingham Midshires and Godiva Mortgages, like the majority of lenders, have their own requirements when it comes to obstruction of access indemnity insurance. This page is designed to help conveyancing lawyers on the different lender conveyancing panel where the title for the the property to be mortgaged incorporates obstruction of access. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it RBS, Chelsea BS or Skipton. The content on this page is not focused on obstruction of access indemnity insurance requirements.
Need help with obstruction of access indemnity insurance from your lender?
Barclays and Coventry BS as with most mortgage companies, instructions are such that where obstruction of access indemnity insurance is to be taken out:
- the obstruction of access indemnity insurance policy should be placed on risk at no expense to the mortgage company
- you must supply a duplicate of the obstruction of access indemnity insurance to the borrower and explain to the borrower why the obstruction of access indemnity insurance policy was effected and that a further policy could be required if there is additional lending against the mortgaged property
- you must approve the terms of the obstruction of access policy on behalf of the mortgage company
- the obstruction of access indemnity insurance policy should always be in favor of the mortgage company and, if possible, for the benefit of the borrower and any subsequent owner or mortgage company. If the mortgagor will not be protected by the obstruction of access indemnity insurance policy, you must advise the mortgagor of this fact.
- you is duty bound to spell out to the borrower that the borrower must comply with any conditions of the obstruction of access indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- the obstruction of access indemnity insurance policy should not incorporate conditions that you are aware would void or prejudice the interests of the mortgage company
- your firm must disclose to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | The value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Holmesdale Building Society | 110% |
| Landmark | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Reliance Bank | £1,000,000.00 |
| 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). |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Topaz Finance | 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. |
| Whistletree | The value of the property |
| Yorkshire Bank | Open market value of property. |
General Obstruction of Access indemnity insurance points to consider
The full terms, conditions and exclusions for obstruction of access indemnity insurance are identified in the policy paperwork. Property lawyers should direct your non-lender client to the obstruction of access indemnity insurance policy document. Obstruction of Access Contingency insurance is devised to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to determine that it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of access indemnity insurance policy. Again, please check that this is as you expected.Important features and benefits of obstruction of access Contingency insurance :
The policy 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 Cover normally includes- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the obstruction of access policy, including fees of a legal nature.
- The out of pocket expenses 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.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the obstruction of access insurance, to the extent that such costs are rendered abortive by court order.
- All sums paid with the written consent of the insurance company to free the property from the risks specified in the obstruction of access insurance.
- Diminution in value resulting from the successful enforcement of the risks specified in the obstruction of access indemnity insurance.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the obstruction of access policy will not be valid.
Further considerations for obstruction of access indemnity insurance
Obstruction of Access insurance may satisfy lenders such as Yorkshire Bank Home Loans or Virgin Money and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. 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 above information is in relation to properties in England and Wales.