Indemnity Insurance of Pre-deceasing Risks Mortgage Company conveyancing obligations
RBS and Santander, as with most lenders, set their own requirements when it comes to pre-deceasing risks indemnity insurance. The content herein aims to help conveyancing solicitors on the numerous mortgage company approved list of panel lawyers where the title for the the property to be mortgaged includes pre-deceasing risks. It is not a alternative for checking the CML handbook requirements for each lender, for example Natwest, Yorkshire Building Society or Nationwide. The information on this page Is not to be read as pre-deceasing risks indemnity insurance advice.
Need help with pre-deceasing risks indemnity insurance from your lender?
Yorkshire Bank Home Loans and Skipton as with the majority of lenders, obligations require that where pre-deceasing risks indemnity insurance is to be put on risk:
- your practice must point out to the mortgagor that the borrower is obliged to comply with any conditions of the pre-deceasing risks indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the policy
- your practice must approve the terms of the pre-deceasing risks policy on behalf of the mortgage company
- the pre-deceasing risks indemnity insurance policy should always be in favor of the lender and, if possible, in favour of the mortgagor and any future owner or lender. If the mortgagor will not be protected by the pre-deceasing risks indemnity insurance policy, the borrower should be informed accordingly.
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- the pre-deceasing risks indemnity insurance policy should not contain conditions which you are aware would invalidate or compromise the interests of the bank
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your practice must provide a duplicate of the pre-deceasing risks indemnity insurance to the borrower and explain to the borrower why the pre-deceasing risks indemnity insurance policy was effected and that a further policy might be required if there is further lending against the security of the property
- the pre-deceasing risks indemnity insurance policy must be placed on risk without cost to the mortgage company
| 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. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bluestone Mortgages | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Bradford & Bingley | Amount of loan + 15% |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Mortgage Express (No 2) | |
| NRAM Ltd | 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. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| 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). |
| St James Place | 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. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS- First Active | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Pre-deceasing Risks Contingency Insurance : Reflections
The extent of the terms for pre-deceasing risks indemnity insurance are explained in the policy document. Conveyancing Practitioners should direct the borrower to the pre-deceasing risks indemnity insurance policy paperwork. Pre-deceasing Risks indemnity insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to ensure it is in order. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the pre-deceasing risks indemnity insurance policy. Adequacy in this regard should be checked.Significant aspects and benefits of pre-deceasing risks Contingency insurance :
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Pre-deceasing Risks indemnity insurance Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the pre-deceasing risks insurance, to the extent that such costs are rendered abortive by court order.
- Liability for damages or compensation incurred in any action in respect of the risks specified in the pre-deceasing risks policy, as well as incurred costs and expenses.
- 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.
- Diminution in value resulting from the successful enforcement of the risks specified in the pre-deceasing risks indemnity insurance.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the pre-deceasing risks policy.
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 pre-deceasing risks policy will not be valid.
Further considerations for pre-deceasing risks indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from pre-deceasing risks insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank solicitor 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 pre-deceasing risks 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.