Indemnity Insurance of Mining and Mineral Rights Mortgage Company conveyancing obligations

Birmingham Midshires and Bank of Scotland, like many mortgage companies, dictate their own requirements when it comes to mining and mineral rights indemnity insurance. The purpose of this page to assist residential conveyancing solicitors on the various lender conveyancing panel where the title to be charged contains mining and mineral rights. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Accord, Virgin Money or Godiva Mortgages. 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 RBS as with the majority of banks, obligations require that where mining and mineral rights indemnity insurance is to be taken out:

• the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
• the mining and mineral rights indemnity insurance policy should not contain terms which you know would invalidate or compromise the interests of the lender
• the mining and mineral rights indemnity insurance policy must be effected without charge to the mortgage company
• your practice must send 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 a further policy could be mandatory if there is additional borrowing against the mortgaged property
• the mining and mineral rights indemnity insurance policy needs to be in favor of the mortgage company and, if possible, in favour of the borrower and any future registered proprietor or bank. If the borrower will not be covered by the mining and mineral rights indemnity insurance policy, the borrower should be advised accordingly.
• your firm is required to reveal to the insurer all relevant information which you have obtained
• your firm must approve the terms of the mining and mineral rights policy on behalf of the bank
• you must explain to the borrower that the borrower will need to adhere to any conditions of the mining and mineral rights indemnity insurance policy and that the mortgagor should notify the lender 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 Section 9.2 of the Part 2 requirements for mortgage companies:

Mining and Mineral Rights Contingency Insurance : Reflections

The full terms, conditions and exclusions for mining and mineral rights indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners should point your non-lender client to the mining and mineral rights indemnity insurance policy document. Mining and Mineral Rights indemnity insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the mining and mineral rights indemnity insurance policy. Adequacy in this regard should be checked.

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Mining and Mineral Rights indemnity insurance: Important characteristics and benefits:

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 are likely to cover the following

• 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.
• Diminution in value due to the successful enforcement of the risks specified in the mining and mineral rights policy.
• Liability for damages or compensation incurred in any proceedings regarding the risks specified in the mining and mineral rights policy, as well as legal and associated costs.
• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
• Money paid with consent in writing from the insurance company to free the land from the risks specified in the mining and mineral rights indemnity insurance.
• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the mining and mineral rights policy, to the extent that such costs are rendered abortive by court decision.

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Always check what is not included in the mining and mineral rights indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?

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Supplemental considerations for mining and mineral rights indemnity insurance

Mining and Mineral Rights insurance may satisfy lenders such as Coventry BS or Santander 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 covers to properties in England and Wales.