Adoption of Road or Sewer Indemnity Insurance Mortgage Company conveyancing requirements
Natwest and Chelsea BS, in common with many banks, have their own specific instructions when it comes to adoption of road or sewer indemnity insurance. The content herein aims to help domestic conveyancing practitioners on the different lender solicitors 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 CML handbook requirements for each bank, be it Virgin Money, Lloyds TSB or Barclays. 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?
Bank of Scotland and Nationwide in common with most banks, obligations require that where adoption of road or sewer indemnity insurance is to be put on risk:
- your practice must explain to the mortgagor that the borrower will need to adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the insurance
- you are responsible for approving the terms of the adoption of road or sewer policy on behalf of the lender
- you must supply a duplicate of the adoption of road or sewer indemnity insurance to the mortgagor and explain to the borrower why the adoption of road or sewer indemnity insurance policy was effected and that additional insurance might be required if there is further lending against the mortgaged property
- the adoption of road or sewer indemnity insurance policy must not incorporate conditions that you are aware would invalidate or compromise the interests of the mortgage company
- your firm is obliged to reveal to the insurer all relevant information which you have obtained
- the adoption of road or sewer indemnity insurance policy must be for the benefit of the bank and, if possible, in favour of the mortgagor and any future registered proprietor or mortgage company. If the mortgagor will not be protected by the adoption of road or sewer indemnity insurance policy, the borrower needs to be advised accordingly.
- the adoption of road or sewer indemnity insurance policy must be effected at no cost to the lender
- the level of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Hampden | The open market value of the property according to the valuation report. |
| 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. |
| Investec | The open market value of the property according to the valuation report. |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| 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. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Whistletree | The value of the property |
| Zephyr Mortgages | 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. |
General Adoption of Road or Sewer indemnity insurance points to consider
The full terms, conditions and exclusions for adoption of road or sewer indemnity insurance are explained in the policy document. Conveyancing solicitors are obliged to direct the borrower to the adoption of road or sewer indemnity insurance policy paperwork. 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 determine that it is correct. 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 Contingency insurance: Significant 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. Adoption of Road or Sewer indemnity insurance Cover normally includes- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Liability for damages or compensation incurred in any action in respect of the risks specified in the adoption of road or sewer 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of 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.
- Market value reduction resulting from the successful enforcement of the risks specified in the adoption of road or sewer insurance.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the adoption of road or sewer indemnity insurance.
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 adoption of road or sewer policy will be invalidated.
Supplemental 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 provided on this webpage is for general information for conveyancers and solicitors 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 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 covers to properties in England and Wales.