Indemnity Insurance of Obstruction of Access Bank conveyancing obligations
Accord and Lloyds TSB, in common with the majority of mortgage companies, set their own specific instructions when it comes to obstruction of access indemnity insurance. This page sets out to enlighten conveyancing firms on the numerous lender solicitors panel where the title for the the property to be mortgaged includes obstruction of access. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Coventry BS, Virgin Money or Godiva Mortgages. The content 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?
Santander and RBS like many banks, requirements are that where obstruction of access indemnity insurance is to be put on risk:
- you must supply a copy of the obstruction of access indemnity insurance to the borrower and explain to the mortgagor why the obstruction of access indemnity insurance policy was effected and that a further policy could be required if there is additional borrowing against the mortgaged property
- the obstruction of access indemnity insurance policy should always be for the benefit of the bank and, wherever possible, in favour of the borrower and any next registered proprietor or mortgagee. If the mortgagor will not be covered by the obstruction of access indemnity insurance policy, you must advise the borrower of this fact.
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- you is duty bound to point out to the borrower that the borrower is obliged to adhere to any conditions of the obstruction of access indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- your practice must approve the terms of the obstruction of access policy on behalf of the lender
- your practice is obliged to disclose to the insurer all relevant information which you have acquired
- the obstruction of access indemnity insurance policy must be placed on risk without charge to the bank
- the obstruction of access indemnity insurance policy should not incorporate terms which you recognise would void or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 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. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Harpenden Building Society | 110% of mortgage advance |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Building Society | 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. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The extent of the terms for obstruction of access indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point 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 set out in the policy schedule - so it is essential check the document to determine that it is as it should be. The lifetime 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.Obstruction of Access Contingency insurance: Important aspects 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 Policies should be checked for the following- Expenses for works (including professional fees) for the purpose of the development started, 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.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the obstruction of access policy.
- 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 resulting from the successful enforcement of the risks specified in the obstruction of access policy.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the obstruction of access indemnity insurance, as well as incurred costs and expenses.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the obstruction of access policy will be invalidated.
Other considerations for obstruction of access indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from obstruction of access insurance may be adequate for your client. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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.