Adoption of Road or Sewer Indemnity Insurance Mortgage Company conveyancing requirements
Chelsea BS and Lloyds TSB, in common with many mortgage companies, dictate their own requirements when it comes to adoption of road or sewer indemnity insurance. The content herein aims to help property law solicitors on the different mortgage company solicitors panel where the title for the the property to be mortgaged incorporates adoption of road or sewer. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, for example Nationwide, Coventry BS or HSBC. 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?
Natwest and Yorkshire Building Society like the majority of banks, requirements are that where adoption of road or sewer indemnity insurance is effected:
- the adoption of road or sewer indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or mortgage company. If the borrower will not be covered by the adoption of road or sewer indemnity insurance policy, the borrower must be informed accordingly.
- the adoption of road or sewer indemnity insurance policy should not contain conditions which you know would void or prejudice the interests of the lender
- the adoption of road or sewer indemnity insurance policy should be effected without expense to the bank
- your practice is duty bound to spell out to the borrower that the borrower will need to comply with any conditions of the adoption of road or sewer indemnity insurance policy and that the borrower should notify the lender 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
- the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your firm must disclose to the insurer all relevant information which you have obtained
- your firm must send a copy 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 might be mandatory if there is additional lending against the mortgaged property
| Lender | Requirement |
|---|---|
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Bradford & Bingley | Amount of loan + 15% |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Harpenden Building Society | 110% of mortgage advance |
| Lloyds | The value 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). |
| 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Express | Amount of loan + 15% |
| Platform | 110% of principal sum. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| 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. |
| Whistletree | The value of the property |
Non lender-specific considerations
The extent of the terms for adoption of road or sewer indemnity insurance are shown in the policy document. Conveyancing solicitors 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 devised to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is in order. The lifetime of this non-investment insurance agreement 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 :
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 Cover normally includes- Expenses for works (including professional 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.
- Cover for compensation incurred in any action regarding the risks specified in the adoption of road or sewer policy, including fees of a legal nature.
- Loss in market value due to the successful enforcement of the risks specified in the adoption of road or sewer insurance.
- The cost 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.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the adoption of road or sewer indemnity insurance.
As with any insurance policy, 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.
Additional considerations for adoption of road or sewer indemnity insurance
Adoption of Road or Sewer Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for Regulated law firms 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 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 is in relation to properties in England and Wales.