Indemnity Insurance of Adoption of Road or Sewer Mortgage Company conveyancing instructions

Bank of Scotland and Virgin Money, in common with the majority of lenders, set their own requirements when it comes to adoption of road or sewer indemnity insurance. This page is designed to help conveyancing practitioners on the numerous bank conveyancing panel where the title for the the property to be mortgaged includes adoption of road or sewer. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each lender, be it Accord, Chelsea BS or Lloyds TSB. The content on this page Is not to be read as adoption of road or sewer indemnity insurance advice.

Need help with adoption of road or sewer indemnity insurance from your lender?


Birmingham Midshires and Nationwide like most banks, obligations require that where adoption of road or sewer indemnity insurance is to be put on risk:

  • the adoption of road or sewer indemnity insurance policy must not incorporate terms that you are aware would void or prejudice the interests of the mortgage company
  • your firm are responsible for approving the terms of the adoption of road or sewer policy on behalf of the lender
  • the adoption of road or sewer indemnity insurance policy must be for the benefit of the bank and, wherever possible, in favour of the mortgagor and any next registered proprietor or mortgagee. Where the mortgagor will not be protected by the adoption of road or sewer indemnity insurance policy, the mortgagor must be informed accordingly.
  • your practice must point out to the mortgagor that the borrower must adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
  • the adoption of road or sewer indemnity insurance policy should be placed on risk without charge to the bank
  • the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
  • you must reveal to the insurer all relevant information which you have obtained
  • your practice must supply a copy of the adoption of road or sewer indemnity insurance to the mortgagor and explain to the mortgagor why the adoption of road or sewer indemnity insurance policy was effected and that a further policy could be necessary if there is supplemental lending against the security of the property
Regarding the extent of cover for the adoption of road or sewer indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for lenders:
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.
Atom Bank At least the open market value of the property according to the valuation report.
Aviva Equity Release Full value of the property.
Bank of Scotland Not less than mortgage advance plus 10%
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.
Bradford & Bingley Amount of loan + 15%
Danske Bank The limit of indemnity insurance should be the purchase price or valuation - whichever is higher
Ecology Building Society An amount equal to at least 110% of the mortgage advance
Fleet Mortgages An amount at least equal to the valuation of the property.
Hampden The open market value of the property according to the valuation report.
Kensington Mortgage Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest.
MPowered Mortgages Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher).
Market Harborough Building Society Purchase price or valuation - higher of the two
Mortgage Agency Services 110% of the purchase price or valuation, whichever is greater
Mortgage Express (No 2)
[This lender has not published an answer to this question. Please contact the lender.]
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.
Nationwide Building Society Purchase Price (valuation if price is at a discount).
Contact Issuing Office for advice on a remortgage
Precise Mortgages An amount at least equal to 110% of the mortgage valuation.
Sainsbury's Bank An amount equal to the higher of the value of the property or the purchase price.
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.

Non lender-specific considerations

The full terms, conditions and exclusions for adoption of road or sewer indemnity insurance are set out in the policy document. Conveyancing solicitors should point the borrower to the adoption of road or sewer indemnity insurance policy itself. The intention of adoption of road or sewer indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is in order. The lifetime 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.

Adoption of Road or Sewer indemnity insurance: Significant characteristics and benefits:

The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the adoption of road or sewer indemnity insurance schedule. Adoption of Road or Sewer 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 ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
  • Diminution in value due to the successful enforcement of the risks specified in the adoption of road or sewer insurance.
  • Liability for damages or compensation incurred in any proceedings regarding the risks specified in the adoption of road or sewer insurance, including fees of a legal nature.
  • Expenses for works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the adoption of road or sewer policy, to the extent that such costs are rendered abortive by court decision.
  • All sums paid with consent in writing from the insurance company to free the land from the risks specified in the adoption of road or sewer indemnity insurance.

Don't forget to check what is not included in the adoption of road or sewer policy e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?

Adoption of Road or Sewer Indemnity Insurance has limitations - Other considerations

Adoption of Road or Sewer insurance may satisfy lenders such as Leeds Building Society or Yorkshire Bank Home Loans 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 mortgage company 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 adoption of road or sewer 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.