Indemnity Insurance of Road Charges Bank conveyancing requirements
Halifax and Barclays, as with most mortgage companies, set their own specific instructions when it comes to road charges indemnity insurance. This page is designed to help residential conveyancing firms on the different lender conveyancing panel where the title to be charged incorporates road charges. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Yorkshire Building Society, Natwest or Leeds Building Society. The content on this page is not focused on road charges indemnity insurance requirements.
Need help with road charges indemnity insurance from your lender?
Coventry BS and Accord like the majority of mortgage companies, requirements are that where road charges indemnity insurance is effected:
- your firm must approve the terms of the road charges policy on behalf of the bank
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the road charges indemnity insurance policy must be effected without cost to the mortgage company
- your firm must supply a duplicate of the road charges indemnity insurance to the mortgagor and explain to the borrower why the road charges indemnity insurance policy was effected and that a further policy could be required if there is supplemental borrowing against the security of the property
- you must point out to the mortgagor that the borrower is obliged to comply with any conditions of the road charges indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
- the road charges indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the borrower and any subsequent owner or mortgage company. Where the mortgagor will not be protected by the road charges indemnity insurance policy, you must advise the borrower of this fact.
- your practice is obliged to disclose to the insurer all relevant information which you have obtained
- the road charges indemnity insurance policy must not incorporate terms that you know would void or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Cynergy Bank | The market value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Hampden | The open market value of the property according to the valuation report. |
| Harpenden Building Society | 110% of mortgage advance |
| Hodge | 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. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Magellan Homeloans | At least equal to the value of the property |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
Non lender-specific considerations
The extent of the terms for road charges indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to direct the borrower to the road charges indemnity insurance policy itself. Road Charges Contingency insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is in order. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the road charges indemnity insurance policy. Adequacy in this regard should be checked.Road Charges indemnity insurance: Important characteristics and benefits:
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. Road Charges indemnity insurance Cover normally includes- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Money paid with the written consent of the insurance company to free the land from the risks specified in the road charges insurance.
- Loss in market value due to the successful enforcement of the risks specified in the road charges insurance.
- 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 road charges policy, to the extent that such costs are rendered abortive by court decision.
- Cover for compensation incurred in any action regarding the risks specified in the road charges policy, as well as solicitors charges.
- The out of pocket expenses 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.
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 road charges policy will be invalidated.
Road Charges Indemnity Insurance has limitations - Other considerations
Road Charges insurance may satisfy lenders such as Barnsley BS or Godiva Mortgages 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. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 road charges 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 covers to properties in England and Wales.