Indemnity Insurance of Obstruction of Access Mortgage Company conveyancing obligations
Birmingham Midshires and Barclays, like most mortgage companies, set their own requirements when it comes to obstruction of access indemnity insurance. This page sets out to enlighten conveyancing practitioners on the numerous bank approved list of panel lawyers where the title to be charged contains obstruction of access. It is not a substitute for checking the CML handbook requirements for each lender, for example HSBC, Accord or RBS. The information on this page Is not to be read as obstruction of access indemnity insurance advice.
Need help with obstruction of access indemnity insurance from your lender?
Leeds Building Society and Nationwide as with most mortgage companies, obligations require that where obstruction of access indemnity insurance is effected:
- your practice is duty bound to point out to the borrower that the borrower must comply with any conditions of the obstruction of access indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the policy
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- you is required to reveal to the insurer all relevant information which you have acquired
- the obstruction of access indemnity insurance policy must not incorporate conditions that you know would void or compromise the interests of the bank
- the obstruction of access indemnity insurance policy should be effected without cost to the mortgage company
- you must send a copy 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 may be required if there is additional borrowing against the security of the property
- the obstruction of access indemnity insurance policy must be for the benefit of the bank and, wherever possible, for the benefit of the borrower and any next owner or bank. If the mortgagor will not be protected by the obstruction of access indemnity insurance policy, the mortgagor must be informed accordingly.
- your firm are responsible for approving the terms of the obstruction of access policy on behalf of the mortgage company
| Lender | Requirement |
|---|---|
| Accord Mortgages | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Bank | completions@birminghambank.com |
| Britannia | Cover to the full value of the property. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Godiva Mortgages | Minimum of the value of the property. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| ITL Mortgages | Minimum of the value of the property. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| 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%. |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
General Obstruction of Access indemnity insurance points to consider
The full terms, conditions and exclusions for obstruction of access indemnity insurance are explained in the policy document. Conveyancing solicitors should point your non-lender client to the obstruction of access indemnity insurance policy document. Obstruction of Access Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Important features and benefits of obstruction of access Contingency insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the obstruction of access indemnity insurance schedule. Obstruction of Access indemnity insurance Cover normally includes- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Expenses for 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.
- Cover for compensation incurred in any action concerning the risks specified in the obstruction of access insurance, including incurred costs and expenses.
- The out of pocket expenses of altering or demolishing 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.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the obstruction of access insurance.
- Market value reduction 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.
Obstruction of Access Indemnity Insurance has limitations - Supplemental considerations
Obstruction of Access insurance may satisfy lenders such as Santander 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. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 covers to properties in England and Wales.