Adoption of Road or Sewer Indemnity Insurance Bank conveyancing requirements
Skipton and Halifax, like many lenders, set their own requirements when it comes to adoption of road or sewer indemnity insurance. The purpose of this page to assist residential conveyancing lawyers on the various bank approved list of panel lawyers where the title to be charged includes adoption of road or sewer. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Lloyds TSB, Barclays or Leeds Building Society. The content on this page is not focused on adoption of road or sewer indemnity insurance requirements.
Need help with adoption of road or sewer indemnity insurance from your lender?
Godiva Mortgages and HSBC in common with the majority of lenders, obligations require that where adoption of road or sewer indemnity insurance is to be taken out:
- the adoption of road or sewer indemnity insurance policy should not incorporate terms that you recognise would invalidate or compromise the interests of the mortgage company
- your firm is duty bound to 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 borrower should notify the bank of any notice or potential claim in relation to the insurance
- your practice must send 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 could be required if there is additional lending against the mortgaged property
- the adoption of road or sewer indemnity insurance policy needs to be for the benefit of the bank and, if possible, for the benefit of the borrower and any next registered proprietor or lender. Where the borrower will not be covered by the adoption of road or sewer indemnity insurance policy, the mortgagor should be advised accordingly.
- the adoption of road or sewer indemnity insurance policy should be placed on risk at no cost to 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 )
- you must disclose to the insurer all relevant information which you have gathered
- your firm must approve the terms of the adoption of road or sewer policy on behalf of the bank
| 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. |
| Barclays plc | Higher of purchase price or valuation |
| Birmingham Bank | Please contact Head of Operations to discuss (Gareth Allen) |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bluestone Mortgages | 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. |
| Cynergy Bank | The market value of the property. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Godiva Mortgages | Minimum of the value of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Investec | The open market value of the property according to the valuation report. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Lloyds | The value of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Magellan Homeloans | At least equal to the value of the property |
| Perenna | The higher of the purchase price or valuation. |
| Platform | 110% of principal sum. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| Royal Bank of Scotland | 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 |
| Whistletree | The value of the property |
General Adoption of Road or Sewer indemnity insurance points to consider
The extent of the terms for adoption of road or sewer indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to point the borrower to the adoption of road or sewer indemnity insurance policy itself. Adoption of Road or Sewer Contingency insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Adoption of Road or Sewer Contingency insurance: Significant characteristics 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- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the adoption of road or sewer indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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.
- The cost of 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 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 adoption of road or sewer policy, including incurred costs and expenses.
- Diminution in value resulting from the successful enforcement of the risks specified in the adoption of road or sewer insurance.
Don't forget to consider what is excluded from the adoption of road or sewer insurance e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Are legal costs covered?
Adoption of Road or Sewer Indemnity Insurance has limitations - Additional considerations
Adoption of Road or Sewer insurance may satisfy lenders such as Natwest or Birmingham Midshires 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. Content on 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 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.