Indemnity Insurance of Road Charges Mortgage Company conveyancing requirements
Birmingham Midshires and Natwest, as with many lenders, dictate their own specific instructions when it comes to road charges indemnity insurance. This page sets out to enlighten property law lawyers on the numerous lender conveyancing panel where the title to be charged contains road charges. Solicitors should still check the CML handbook requirements for each lender, be it Barclays, Coventry BS or RBS. The content on this page is not focused on road charges indemnity insurance requirements.
Need help with road charges indemnity insurance from your lender?
Yorkshire Bank Home Loans and Santander in common with most mortgage companies, requirements are that where road charges indemnity insurance is to be put on risk:
- the road charges indemnity insurance policy must be placed on risk without cost to the lender
- 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 additional lending against the mortgaged property
- your firm are responsible for approving the terms of the road charges policy on behalf 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 )
- the road charges indemnity insurance policy must not incorporate conditions that you know would invalidate or compromise the interests of the lender
- you is obliged to disclose to the insurer all relevant information which you have obtained
- your practice must point out to the mortgagor that the borrower must adhere to any conditions of the road charges indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
- the road charges indemnity insurance policy needs to be for the benefit of the lender and, wherever possible, for the benefit of the borrower and any next registered proprietor or bank. Where the mortgagor will not be protected by the road charges indemnity insurance policy, the mortgagor must be advised accordingly.
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bradford & Bingley | Amount of loan + 15% |
| Britannia | Cover to the full value of the property. |
| Chelsea 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. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Investec | The open market value of the property according to the valuation report. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Scottish Widows | The value of the property. |
| 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). |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Whistletree | The value of the property |
| Yorkshire 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. |
Road Charges Contingency Insurance : Reflections
The extent of the terms for road charges indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client to the road charges indemnity insurance policy paperwork. Road Charges indemnity insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to determine that it is as it should be. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Important aspects and benefits of road charges indemnity 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. Road Charges indemnity insurance Policies are likely to cover the following- 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 the written consent of the relevant insurance company
- 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 road charges policy, to the extent that such costs are rendered abortive by court decision.
- Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the road charges policy, as well as solicitors charges.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the road charges indemnity insurance.
- Loss in market value resulting from the successful enforcement of the risks specified in the road charges policy.
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.
Supplemental considerations for road charges indemnity insurance
Road Charges Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that road charges indemnity cover will not necessarily be the right solution. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company 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 above information is in relation to properties in England and Wales.