Indemnity Insurance of Mining and Mineral Rights Lender conveyancing obligations
Leeds Building Society and Barclays, as with many banks, have their own specific instructions when it comes to mining and mineral rights indemnity insurance. The content herein aims to help residential conveyancing solicitors on the various lender solicitors panel where the title to be charged includes mining and mineral rights. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, be it Accord, Halifax or HSBC. The content on this page Is not to be read as mining and mineral rights indemnity insurance advice.
Need help with mining and mineral rights indemnity insurance from your lender?
Coventry BS and Lloyds TSB as with most mortgage companies, obligations require that where mining and mineral rights indemnity insurance is to be taken out:
- your firm must reveal to the insurer all relevant information which you have acquired
- you must provide a duplicate of the mining and mineral rights indemnity insurance to the borrower and explain to the mortgagor why the mining and mineral rights indemnity insurance policy was effected and that a further policy may be mandatory if there is additional borrowing against the mortgaged property
- the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- you is duty bound to point out to the mortgagor that the borrower will need to comply with any conditions of the mining and mineral rights indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- your firm are responsible for approving the terms of the mining and mineral rights policy on behalf of the lender
- the mining and mineral rights indemnity insurance policy should be placed on risk at no expense to the bank
- the mining and mineral rights indemnity insurance policy should not incorporate conditions that you are aware would void or compromise the interests of the lender
- the mining and mineral rights indemnity insurance policy needs to be in favor of the bank and, if possible, in favour of the borrower and any next registered proprietor or lender. Where the mortgagor will not be protected by the mining and mineral rights indemnity insurance policy, the borrower should be informed accordingly.
| Lender | Requirement |
|---|---|
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Birmingham Bank | Please contact Head of Operations to discuss (Gareth Allen) |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Godiva Mortgages | Minimum of the value of the property. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Holmesdale Building Society | 110% |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds | The value of the property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| St James Place | 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. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Zephyr Mortgages | 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. |
Mining and Mineral Rights Contingency Insurance : Reflections
The extent of the terms for mining and mineral rights indemnity insurance are set out in the policy paperwork. Property lawyers should point the borrower to the mining and mineral rights indemnity insurance policy document. The intention of mining and mineral rights indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is correct. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Important characteristics and benefits of mining and mineral rights 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. Mining and Mineral Rights indemnity insurance Policies should be checked for the following- The cost of works (including professional fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the mining and mineral rights insurance, to the extent that such costs are rendered abortive by court order.
- 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 other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Cover for compensation incurred in any action in respect of the risks specified in the mining and mineral rights indemnity insurance, including legal and associated costs.
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the mining and mineral rights insurance.
- Loss in market value due to the successful enforcement of the risks specified in the mining and mineral rights insurance.
You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form thoroughly prior to any claim being paid out.
Mining and Mineral Rights Indemnity Insurance has limitations - Further considerations
Mining and Mineral Rights insurance may satisfy lenders such as Bank of Scotland or Chelsea BS 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 conveyancers and solicitors in England and Wales on the the bank 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 mining and mineral rights 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 is in relation to properties in England and Wales.