Indemnity Insurance of Obstruction of Access Mortgage Company conveyancing instructions
Skipton and Accord, as with many lenders, dictate their own requirements when it comes to obstruction of access indemnity insurance. The purpose of this page to assist residential conveyancing practitioners on the numerous mortgage company approved list of panel lawyers where the title for the the property to be mortgaged includes obstruction of access. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, whether it be Chelsea BS, Barnsley BS or Birmingham Midshires. 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?
Yorkshire Building Society and Coventry BS as with most mortgage companies, instructions are such that where obstruction of access indemnity insurance is to be put on risk:
- the obstruction of access indemnity insurance policy should be effected at no charge to the mortgage company
- your firm must approve the terms of the obstruction of access policy on behalf of the lender
- your practice is duty bound to point out to the borrower that the borrower must adhere to any conditions of the obstruction of access indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- your practice must disclose to the insurer all relevant information which you have obtained
- the obstruction of access indemnity insurance policy needs to be in favor of the mortgage company and, if possible, in favour of the mortgagor and any future registered proprietor or bank. If the borrower will not be protected by the obstruction of access indemnity insurance policy, you must advise the borrower of this fact.
- your practice must send a duplicate of the obstruction of access indemnity insurance to the mortgagor and explain to the mortgagor why the obstruction of access indemnity insurance policy was effected and that a further policy might be required if there is further borrowing against the security of the property
- the obstruction of access indemnity insurance policy must not incorporate conditions that you are aware would void or compromise the interests of the mortgage company
- the level of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | 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. |
| Investec | The open market value of the property according to the valuation report. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Perenna | The higher of the purchase price or valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Scottish Widows | The value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Obstruction of Access Contingency Insurance : Reflections
The extent of the terms for obstruction of access indemnity insurance are identified in the policy document. Property lawyers are obliged to point your non-lender client to the obstruction of access indemnity insurance policy document. The intention of obstruction of access indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check the document to determine that it is correct. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of access indemnity insurance policy. It is well worth checking that the time frame is correct.Obstruction of Access indemnity insurance: Important features 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. Obstruction of Access indemnity insurance Cover normally includes- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Cover for compensation incurred in any action regarding the risks specified in the obstruction of access indemnity insurance, including fees of a legal nature.
- Money paid with the written consent of the insurance company to free the land from the risks specified in the obstruction of access insurance.
- Expenses for works (including professional fees) for the purpose of the development commenced, prior to 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.
- The cost 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.
- Market value reduction due to the successful enforcement of the risks specified in the obstruction of access insurance.
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 certain that the insurer will check the details on any proposal form thoroughly prior to any claim being met.
Additional considerations for obstruction of access indemnity insurance
Obstruction of Access insurance may satisfy lenders such as Leeds Building Society or RBS 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 contained within this webpage is for general information for Regulated law firms 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 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 covers to properties in England and Wales.