Adoption of Road or Sewer Indemnity Insurance Lender conveyancing requirements
Birmingham Midshires and Natwest, as with many lenders, dictate their own requirements when it comes to adoption of road or sewer indemnity insurance. This page sets out to enlighten domestic conveyancing solicitors on the different mortgage company conveyancing panel where the title for the the property to be mortgaged incorporates adoption of road or sewer. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Godiva Mortgages, Halifax or Leeds Building Society. The information 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?
RBS and Skipton like the majority of mortgage companies, instructions are such that where adoption of road or sewer indemnity insurance is effected:
- you are responsible for approving the terms of the adoption of road or sewer policy on behalf of the lender
- your firm must disclose to the insurer all relevant information which you have obtained
- your practice must spell out 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 respect of the insurance
- the adoption of road or sewer indemnity insurance policy should be placed on risk without cost to the mortgage company
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- the adoption of road or sewer indemnity insurance policy must be in favor of the bank and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or mortgagee. Where the mortgagor will not be covered by the adoption of road or sewer indemnity insurance policy, you must advise the mortgagor of this fact.
- you must supply a duplicate of the adoption of road or sewer indemnity insurance to the borrower and explain to the borrower why the adoption of road or sewer indemnity insurance policy was effected and that additional insurance might be necessary if there is further lending against the mortgaged property
- the adoption of road or sewer indemnity insurance policy must not incorporate terms that you know would invalidate or prejudice the interests of the lender
| Lender | Requirement |
|---|---|
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| 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. |
| Bradford & Bingley | Amount of loan + 15% |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Generation Home | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Godiva Mortgages | Minimum of the value of the property. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Holmesdale Building Society | 110% |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Landmark | 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. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| 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. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| 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. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS - Direct Line One | An amount equal to the value of the property. |
Adoption of Road or Sewer Contingency Insurance : Reflections
The extent of the terms for adoption of road or sewer indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners should point your non-lender client to the adoption of road or sewer indemnity insurance policy paperwork. Adoption of Road or Sewer Contingency insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is as it should be. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the adoption of road or sewer indemnity insurance policy. Adequacy in this regard should be checked.Significant aspects and benefits of adoption of road or sewer indemnity insurance :
The policy 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 should be checked for the following- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the adoption of road or sewer policy.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, 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 order.
- The cost 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.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the adoption of road or sewer indemnity insurance, as well as legal and associated costs.
- Diminution in value resulting from the successful enforcement of the risks specified in the adoption of road or sewer policy.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
Always 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 policy being put on risk? Are legal costs covered?
Supplemental considerations for adoption of road or sewer indemnity insurance
Adoption of Road or Sewer insurance may satisfy lenders such as Barnsley BS or Accord 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 lender 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 content set out above covers to properties in England and Wales.