Pre-deceasing Risks Indemnity Insurance Bank conveyancing requirements
Coventry BS and Nationwide, as with most banks, have their own specific instructions when it comes to pre-deceasing risks indemnity insurance. The purpose of this page to assist conveyancing lawyers on the numerous lender solicitors panel where the title to be charged contains pre-deceasing risks. Solicitors should still check the CML handbook requirements for each lender, whether it be Bank of Scotland, HSBC or Natwest. The content 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?
Santander and Barclays like many lenders, requirements are that where pre-deceasing risks indemnity insurance is effected:
- you must approve the terms of the pre-deceasing risks policy on behalf of the lender
- the pre-deceasing risks indemnity insurance policy should be placed on risk at no charge to the lender
- your practice is obliged to reveal to the insurer all relevant information which you have obtained
- the pre-deceasing risks indemnity insurance policy must not contain terms that you recognise would void or prejudice the interests of the lender
- the pre-deceasing risks indemnity insurance policy needs to be in favor of the lender and, if possible, in favour of the mortgagor and any next registered proprietor or mortgagee. Where the mortgagor will not be protected by the pre-deceasing risks indemnity insurance policy, you must advise the mortgagor of this fact.
- your practice must point out to the mortgagor that the borrower will need to comply with any conditions of the pre-deceasing risks indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- your firm must provide a copy of the pre-deceasing risks indemnity insurance to the borrower and explain to the mortgagor why the pre-deceasing risks indemnity insurance policy was effected and that a further policy may be required if there is further borrowing against the security of the property
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Bank of Scotland | The value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Barnsley 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. |
| 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. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Harpenden Building Society | 110% of mortgage advance |
| Investec | The open market value of the property according to the valuation report. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Metro Bank | The open market value of the property according to the valuation report. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Scottish Widows | The value of the property. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| RBS- First Active | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
Pre-deceasing Risks Contingency Insurance : Reflections
The extent of the terms for pre-deceasing risks indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners should point the borrower to the pre-deceasing risks indemnity insurance policy paperwork. Pre-deceasing Risks Contingency insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to determine that it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless otherwise stated in the pre-deceasing risks indemnity insurance policy. Adequacy in this regard should be checked.Pre-deceasing Risks Contingency insurance: Significant features 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. Pre-deceasing Risks indemnity insurance Policies should be checked for the following- Loss in market value resulting from the successful enforcement of the risks specified in the pre-deceasing risks insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the pre-deceasing risks indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Liability for damages or compensation incurred in any action regarding the risks specified in the pre-deceasing risks policy, as well as legal and associated costs.
- 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.
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the pre-deceasing risks insurance.
Don't forget to consider what is excluded from the pre-deceasing risks insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Supplemental 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. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender approved 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 is in relation to properties in England and Wales.