Obstruction of Access Indemnity Insurance Lender conveyancing requirements
HSBC and Coventry BS, like many lenders, dictate their own requirements when it comes to obstruction of access indemnity insurance. The purpose of this page to assist domestic conveyancing lawyers on the numerous bank solicitors panel where the title for the the property to be mortgaged includes obstruction of access. It is not a alternative for checking the CML handbook requirements for each mortgage company, be it Birmingham Midshires, Barnsley BS or Halifax. The content on this page is not focused on obstruction of access indemnity insurance requirements.
Need help with obstruction of access indemnity insurance from your lender?
RBS and Yorkshire Building Society as with most banks, requirements are that where obstruction of access indemnity insurance is effected:
- your practice must approve the terms of the obstruction of access policy on behalf of the bank
- the obstruction of access indemnity insurance policy should be placed on risk without charge to the lender
- your practice must point out to the mortgagor that the borrower must comply with any conditions of the obstruction of access indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
- your practice must supply a duplicate of the obstruction of access indemnity insurance to the mortgagor and explain to the borrower why the obstruction of access indemnity insurance policy was effected and that a further policy might be required if there is supplemental borrowing against the security of the property
- the level of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your practice must disclose to the insurer all relevant information which you have obtained
- the obstruction of access indemnity insurance policy must not contain conditions that you recognise would invalidate or compromise the interests of the mortgage company
- the obstruction of access indemnity insurance policy should always be in favor of the lender and, wherever possible, in favour of the mortgagor and any future registered proprietor or mortgagee. Where the mortgagor will not be covered by the obstruction of access indemnity insurance policy, the mortgagor must be advised accordingly.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Halifax | An amount at least equal to the mortgage advance. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| ITL Mortgages | Minimum of the value of the property. |
| Investec | The open market value of the property according to the valuation report. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Landmark | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds | The value of the property. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Reliance Bank | \xA31,000,000.00 |
| Scottish Building Society | Amount of mortgage plus 25%. |
| RBS (One Account) | An amount equal to the value of the property. |
| Topaz Finance | 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. |
General Obstruction of Access indemnity insurance points to consider
The extent of the terms for obstruction of access indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to direct your non-lender client to the obstruction of access indemnity insurance policy paperwork. The intention of obstruction of access indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to determine that it is in order. 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.Obstruction of Access indemnity insurance: Significant features and benefits:
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. Obstruction of Access indemnity insurance Cover normally includes- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- The cost 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.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the obstruction of access indemnity insurance, including incurred costs and expenses.
- The cost of works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the obstruction of access indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the obstruction of access insurance.
- Loss in market value resulting from the successful enforcement of the risks specified in the obstruction of access policy.
You also need to be sure that the answers on the application form are correct. 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 prior to any claim being admitted.
Other considerations for obstruction of access indemnity insurance
Obstruction of Access Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that obstruction of access indemnity cover will not necessarily be the right solution. Content on this webpage is for general information for Regulated law firms 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 bank 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 obstruction of access Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information is in relation to properties in England and Wales.