Improvement Grant Liability Indemnity Insurance Bank conveyancing requirements

Accord and Godiva Mortgages, like the majority of banks, have their own specific instructions when it comes to improvement grant liability indemnity insurance. The content herein aims to help residential conveyancing firms on the various mortgage company conveyancing panel where the title for the the property to be mortgaged includes improvement grant liability. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it Santander, Barclays or Lloyds TSB. 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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Birmingham Midshires and Yorkshire Building Society in common with the majority of banks, obligations require that where improvement grant liability indemnity insurance is to be put on risk:

• the improvement grant liability indemnity insurance policy should not incorporate conditions which you are aware would void or compromise the interests of the bank
• your firm is required to reveal to the insurer all relevant information which you have gathered
• the limit of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
• your practice are responsible for approving the terms of the improvement grant liability policy on behalf of the lender
• the improvement grant liability indemnity insurance policy should be effected without expense to the lender
• your firm must send a duplicate of the improvement grant liability indemnity insurance to the borrower and explain to the mortgagor why the improvement grant liability indemnity insurance policy was effected and that a further policy may be mandatory if there is supplemental lending against the security of the property
• your firm is duty bound to point out to the borrower that the borrower must comply with any conditions of the improvement grant liability indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the insurance
• the improvement grant liability indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any next registered proprietor or mortgage company. If the borrower will not be protected by the improvement grant liability indemnity insurance policy, the borrower needs to be advised accordingly.

As to the level 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 mortgage companies:

Improvement Grant Liability Contingency Insurance : Reflections

The extent of the terms for improvement grant liability indemnity insurance are identified in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client to the improvement grant liability indemnity insurance policy itself. Improvement Grant Liability 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 ensure it is as it should be. 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.

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Significant features and benefits of improvement grant liability Contingency 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. Improvement Grant Liability indemnity insurance Policies should be checked for the following

• Liability for damages or compensation incurred in any proceedings concerning the risks specified in the improvement grant liability insurance, including solicitors charges.
• Market value reduction due to the successful enforcement of the risks specified in the improvement grant liability insurance.
• Expenses for works (including professional fees) for the purpose of the development commenced, prior to 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.
• 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.
• 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 free the land from the risks specified in the improvement grant liability indemnity insurance.

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Always consider what is excluded from the improvement grant liability policy e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?

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Further considerations for improvement grant liability indemnity insurance

Improvement Grant Liability 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 improvement grant liability indemnity cover will not necessarily be the answer.

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The above information is in relation to properties in England and Wales.