Bank conveyancing panel requirements re Improvement Grant Liability Indemnity Insurance

Barclays and Nationwide, like many banks, dictate their own requirements when it comes to improvement grant liability indemnity insurance. This page sets out to enlighten property law practitioners on the various mortgage company approved list of panel lawyers where the title to be charged contains improvement grant liability. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Chelsea BS, Santander or Skipton. The content on this page is not focused on improvement grant liability indemnity insurance requirements.

Need help with improvement grant liability indemnity insurance from your lender?

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Accord and Coventry BS like most banks, instructions are such that where improvement grant liability indemnity insurance is to be put on risk:

• your firm must send a copy of the improvement grant liability indemnity insurance to the mortgagor and explain to the mortgagor why the improvement grant liability indemnity insurance policy was effected and that additional insurance may be required if there is additional borrowing against the security of the property
• the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
• the improvement grant liability indemnity insurance policy needs to be for the benefit of the bank and, wherever possible, in favour of the mortgagor and any future registered proprietor or mortgagee. If the borrower will not be protected by the improvement grant liability indemnity insurance policy, the borrower should be advised accordingly.
• your practice is required to disclose to the insurer all relevant information which you have acquired
• you are responsible for approving the terms of the improvement grant liability policy on behalf of the lender
• the improvement grant liability indemnity insurance policy must not contain terms that you know would invalidate or prejudice the interests of the mortgage company
• the improvement grant liability indemnity insurance policy must be placed on risk at no expense to the lender
• you must spell out to the borrower that the borrower will need to adhere to any conditions of the improvement grant liability indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the insurance

Regarding the extent of cover for the improvement grant liability indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the CML handbook PII requirements for banks:

Improvement Grant Liability Contingency Insurance : Reflections

The full terms, conditions and exclusions for improvement grant liability indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners are obliged to point your non-lender client to the improvement grant liability indemnity insurance policy paperwork. Improvement Grant Liability Contingency insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to ensure it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.

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Significant characteristics and benefits of improvement grant liability Contingency insurance :

The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the improvement grant liability indemnity insurance schedule. Improvement Grant Liability indemnity insurance Cover normally includes

• Market value reduction resulting from the successful enforcement of the risks specified in the improvement grant liability indemnity insurance.
• 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.
• The cost of works (including architects’ and surveyors’ 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 improvement grant liability indemnity insurance, to the extent that such costs are rendered abortive by court decision.
• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
• All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the improvement grant liability indemnity insurance.
• Liability for damages or compensation incurred in any action concerning the risks specified in the improvement grant liability indemnity insurance, as well as fees of a legal nature.

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Due diligence should extend to checking that the answers on the application form are correct. However remote the likelihood of a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly prior to any claim being met.

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Further considerations for improvement grant liability indemnity insurance

Improvement Grant Liability insurance may satisfy lenders such as Yorkshire Building Society or Godiva Mortgages 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.

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The content set out above covers to properties in England and Wales.