Mortgage Company conveyancing panel requirements re Mining and Mineral Rights Indemnity Insurance

RBS and Bank of Scotland, in common with the majority of banks, dictate their own requirements when it comes to mining and mineral rights indemnity insurance. This page is designed to help property law solicitors on the various lender conveyancing panel where the title to be charged incorporates mining and mineral rights. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Skipton, Barclays or Chelsea BS. The information on this page is not focused on mining and mineral rights indemnity insurance requirements.

Need help with mining and mineral rights indemnity insurance from your lender?

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HSBC and Santander as with many banks, instructions are such that where mining and mineral rights indemnity insurance is effected:

• the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
• you is duty bound to spell out to the borrower that the borrower is obliged 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 relation to the insurance
• the mining and mineral rights indemnity insurance policy must be effected without charge to the mortgage company
• you must supply a duplicate of the mining and mineral rights indemnity insurance to the mortgagor and explain to the borrower why the mining and mineral rights indemnity insurance policy was effected and that additional insurance could be necessary if there is supplemental borrowing against the mortgaged property
• the mining and mineral rights indemnity insurance policy should always be for the benefit of the mortgage company and, if possible, in favour of the borrower and any future registered proprietor or lender. Where the mortgagor will not be covered by the mining and mineral rights indemnity insurance policy, you must advise the borrower of this fact.
• you must disclose to the insurer all relevant information which you have gathered
• you 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 not incorporate terms which you are aware would invalidate or prejudice the interests of the lender

As to the level of cover for the mining and mineral rights indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for lenders:

Mining and Mineral Rights Contingency Insurance : Reflections

The extent of the terms for mining and mineral rights indemnity insurance are shown in the policy paperwork. Conveyancing solicitors 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 provide indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the mining and mineral rights indemnity insurance policy. It is well worth checking that the time frame is correct.

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Significant aspects and benefits of mining and mineral rights indemnity insurance :

Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Mining and Mineral Rights indemnity insurance Policies should be checked for the following

• Reimbursement for compensation incurred in any action in respect of the risks specified in the mining and mineral rights policy, including solicitors charges.
• All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
• 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.
• Loss in market value due to the successful enforcement of the risks specified in the mining and mineral rights insurance.
• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of 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 decision.
• Money paid with the written consent of the insurance company to free the land from the risks specified in the mining and mineral rights indemnity insurance.

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You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the mortgage company insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully before any claim is met.

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Mining and Mineral Rights Indemnity Insurance has limitations - Additional considerations

There may be consequences arising from the enforcement of the risks identified in the mining and mineral rights insurance which are not adequately covered by financial compensation.

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