Mining and Mineral Rights Indemnity Insurance Lender conveyancing requirements

Yorkshire Bank Home Loans and Accord, as with most lenders, set their own specific instructions when it comes to mining and mineral rights indemnity insurance. This page is designed to help domestic conveyancing lawyers on the various mortgage company solicitors panel where the title to be charged contains mining and mineral rights. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, whether it be Lloyds TSB, Chelsea BS or Barnsley 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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Nationwide and Godiva Mortgages as with many mortgage companies, instructions are such that where mining and mineral rights indemnity insurance is effected:

• the limit of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
• you must provide a copy 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 might be necessary if there is further borrowing against the security of the property
• the mining and mineral rights indemnity insurance policy must not incorporate terms that you recognise would invalidate or compromise the interests of the mortgage company
• your firm is duty bound to point out to the borrower that the borrower must comply with any conditions of the mining and mineral rights indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
• you are responsible for approving the terms of the mining and mineral rights policy on behalf of the lender
• you is obliged to reveal to the insurer all relevant information which you have gathered
• 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 subsequent owner or mortgagee. Where the borrower will not be protected by the mining and mineral rights indemnity insurance policy, you must advise the borrower of this fact.
• the mining and mineral rights indemnity insurance policy must be effected at no cost to the bank

Regarding the extent 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 CML handbook PII requirements for mortgage companies:

Non lender-specific considerations

The full terms, conditions and exclusions for mining and mineral rights indemnity insurance are shown in the policy paperwork. Conveyancing solicitors are obliged to point the borrower to the mining and mineral rights indemnity insurance policy paperwork. Mining and Mineral Rights indemnity insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is in order. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.

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Important characteristics and benefits of mining and mineral rights Contingency 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 Cover normally includes

• Market value reduction due to the successful enforcement of the risks specified in the mining and mineral rights indemnity insurance.
• Reimbursement for compensation incurred in any action regarding the risks specified in the mining and mineral rights policy, as well as incurred costs and expenses.
• All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
• 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.
• Expenses for 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 indemnity insurance, to the extent that such costs are rendered abortive by court decision.
• All sums paid with the written consent of the insurance company to liberate the property 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 bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is admitted.

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Mining and Mineral Rights Indemnity Insurance has limitations - Supplemental considerations

Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from mining and mineral rights insurance may be adequate for your client.

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