Indemnity Insurance of Adoption of Road or Sewer Lender conveyancing obligations

Virgin Money and RBS, in common with many lenders, dictate their own specific instructions when it comes to adoption of road or sewer indemnity insurance. This page sets out to enlighten property law firms on the numerous mortgage company conveyancing panel where the title to be charged contains adoption of road or sewer. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Natwest, Bank of Scotland or Yorkshire Building Society. The information 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?


Nationwide and Birmingham Midshires as with many lenders, instructions are such that where adoption of road or sewer indemnity insurance is to be put on risk:

  • the adoption of road or sewer indemnity insurance policy should be placed on risk at no expense to the mortgage company
  • the minimum level of cover for the policy must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
  • your practice must point out to the borrower that the borrower must comply with any conditions of the adoption of road or sewer indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
  • you must supply a duplicate of the adoption of road or sewer indemnity insurance to the borrower and explain to the mortgagor why the adoption of road or sewer indemnity insurance policy was effected and that a further policy could be mandatory if there is further lending against the mortgaged property
  • you 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 should always be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or mortgagee. Where the borrower will not be protected by the adoption of road or sewer indemnity insurance policy, the borrower should be informed accordingly.
  • your firm is required to reveal to the insurer all relevant information which you have gathered
  • the adoption of road or sewer indemnity insurance policy should not incorporate terms which you know would invalidate or compromise the interests of the mortgage company
As to the level 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 banks:
Lender Requirement
Ahli United Bank An amount equal to the value of the Mortgaged Property
Bank of Scotland Not less than mortgage advance plus 10%
Britannia Cover to the full value of the property.
Coutts & Co The open market value of the property according to the valuation report.
Ecology Building Society An amount equal to at least 110% of the mortgage advance
Halifax An amount at least equal to the mortgage advance.
Hampden The open market value of the property according to the valuation report.
Harpenden Building Society 110% of mortgage advance
Holmesdale Building Society 110%
Intelligent Finance 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.
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
Masthaven Bank 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.
Pepper Money (UK) 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).
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).
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.
Tipton Coseley Building Society Minimum of mortgage advance.

Non lender-specific considerations

The extent of the terms for adoption of road or sewer indemnity insurance are identified in the policy document. Conveyancing solicitors are obliged to point the borrower to the adoption of road or sewer indemnity insurance policy document. The intention of adoption of road or sewer indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check the document to ensure 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.

Adoption of Road or Sewer indemnity 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. Adoption of Road or Sewer indemnity insurance Policies should be checked for the following
  • The cost of altering or taking down 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 adoption of road or sewer indemnity insurance.
  • Money paid with the written consent of the insurance company to liberate the land from the risks specified in the adoption of road or sewer insurance.
  • All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
  • Liability for damages or compensation incurred in any proceedings concerning the risks specified in the adoption of road or sewer insurance, as well as 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 indemnity insurance, to the extent that such costs are rendered abortive by court decision.

Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully before any claim is met.

Additional considerations for adoption of road or sewer indemnity insurance

Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from adoption of road or sewer insurance may be adequate for your client.
Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 is in relation to properties in England and Wales.

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