Lender conveyancing panel conditions re Mining and Mineral Rights Indemnity Insurance

Barclays and Lloyds TSB, as with many banks, set their own specific instructions when it comes to mining and mineral rights indemnity insurance. The purpose of this page to assist conveyancing lawyers on the numerous lender conveyancing panel where the title for the the property to be mortgaged incorporates mining and mineral rights. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each lender, for example RBS, Yorkshire Building Society or Chelsea BS. The content 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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Leeds Building Society and Godiva Mortgages in common with the majority of mortgage companies, requirements are that where mining and mineral rights indemnity insurance is effected:

• the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
• the mining and mineral rights indemnity insurance policy should always be in favor of the bank and, wherever possible, in favour of the mortgagor and any next owner or mortgage company. Where the borrower will not be protected by the mining and mineral rights indemnity insurance policy, the borrower should be advised accordingly.
• you are responsible for approving the terms of the mining and mineral rights policy on behalf of the mortgage company
• the mining and mineral rights indemnity insurance policy should be effected at no cost to the lender
• your firm must supply a duplicate of the mining and mineral rights indemnity insurance to the mortgagor and explain to the mortgagor why the mining and mineral rights indemnity insurance policy was effected and that a further policy could be required if there is additional lending against the mortgaged property
• you is required to reveal to the insurer all relevant information which you have obtained
• the mining and mineral rights indemnity insurance policy must not incorporate terms that you are aware would invalidate or compromise the interests of the mortgage company
• your practice is duty bound to spell out to the borrower that the borrower must comply with any conditions of the mining and mineral rights indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the insurance

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 Paragraph 9.2 of the CML handbook PII requirements for lenders:

Mining and Mineral Rights Contingency Insurance : Reflections

The full terms, conditions and exclusions for mining and mineral rights indemnity insurance are identified in the policy document. Property lawyers are obliged to direct the borrower to the mining and mineral rights indemnity insurance policy document. Mining and Mineral Rights indemnity 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 determine that it is correct. The duration 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.

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Important features 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 Cover normally includes

• 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.
• Diminution in value due to the successful enforcement of the risks specified in the mining and mineral rights policy.
• Reimbursement for compensation incurred in any action in respect of the risks specified in the mining and mineral rights insurance, as well as incurred costs and expenses.
• 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 consent in writing from the relevant insurance company
• The cost of works (including professional fees) for the purpose of the development begun, or contracted for, prior to 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.

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Due diligence should extend to checking that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully before any claim is met.

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Additional considerations for mining and mineral rights indemnity insurance

Mining and Mineral Rights insurance may satisfy lenders such as Halifax or Virgin Money 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 is in relation to properties in England and Wales.