Lender conveyancing panel requirements re Contingent Buildings Indemnity Insurance
Godiva Mortgages and Skipton, in common with the majority of banks, have their own requirements when it comes to contingent buildings indemnity insurance. This page is designed to help conveyancing practitioners on the numerous lender solicitors panel where the title to be charged includes contingent buildings. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Natwest, Yorkshire Bank Home Loans or RBS. The content on this page is not focused on contingent buildings indemnity insurance requirements.
Need help with contingent buildings indemnity insurance from your lender?
Barclays and Bank of Scotland as with most lenders, instructions are such that where contingent buildings indemnity insurance is to be taken out:
- your firm must reveal to the insurer all relevant information which you have obtained
- your firm is duty bound to point out to the borrower that the borrower is obliged to comply with any conditions of the contingent buildings indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the policy
- the contingent buildings indemnity insurance policy should always be in favor of the bank and, wherever possible, for the benefit of the borrower and any subsequent owner or mortgage company. If the mortgagor will not be protected by the contingent buildings indemnity insurance policy, the borrower must be advised accordingly.
- your practice must provide a duplicate of the contingent buildings indemnity insurance to the mortgagor and explain to the mortgagor why the contingent buildings indemnity insurance policy was effected and that additional insurance may be necessary if there is additional lending against the mortgaged property
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice are responsible for approving the terms of the contingent buildings policy on behalf of the lender
- the contingent buildings indemnity insurance policy must be effected without cost to the mortgage company
- the contingent buildings indemnity insurance policy must not contain terms which you know would void or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Birmingham Bank | Please contact Head of Operations to discuss (Jackie Burchill) |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Chelsea Building Society | 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. |
| 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. |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds | The value of the property. |
| Mortgage Express | Amount of loan + 15% |
| National Westminster Bank | An amount equal to the value of the property. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Pepper Money | 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). |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| 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). |
| Scottish Building Society | Amount of mortgage plus 25%. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
Non lender-specific considerations
The extent of the terms for contingent buildings indemnity insurance are explained in the policy document. Conveyancing solicitors are obliged to point the borrower to the contingent buildings indemnity insurance policy itself. Contingent Buildings Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so you should check any draft to ensure it is correct. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Significant aspects and benefits of contingent buildings Contingency insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the contingent buildings indemnity insurance schedule. Contingent Buildings indemnity insurance Policies are likely to cover the following- Diminution in value due to the successful enforcement of the risks specified in the contingent buildings policy.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the contingent buildings policy, to the extent that such costs are rendered abortive by court order.
- Cover for compensation incurred in any proceedings concerning the risks specified in the contingent buildings policy, including incurred costs and expenses.
- The out of pocket expenses 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.
- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the contingent buildings insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
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 contingent buildings policy will not be valid.
Supplemental considerations for contingent buildings indemnity insurance
Contingent Buildings Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that contingent buildings indemnity cover will not necessarily be the answer. Information provided on this webpage is for general information for conveyancers and solicitors 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 lender 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 contingent buildings 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.