Lender conveyancing panel conditions re Obstruction of Access Indemnity Insurance
Nationwide and Yorkshire Bank Home Loans, as with the majority of lenders, dictate their own specific instructions when it comes to obstruction of access indemnity insurance. The content herein aims to help residential conveyancing lawyers on the numerous bank conveyancing panel where the title to be charged incorporates obstruction of access. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, be it Yorkshire Building Society, Leeds Building Society or RBS. 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?
Virgin Money and Chelsea BS in common with most mortgage companies, requirements are that where obstruction of access indemnity insurance is effected:
- the obstruction of access indemnity insurance policy must be effected at no charge to the lender
- the obstruction of access indemnity insurance policy should always be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any future owner or mortgagee. Where the borrower will not be covered by the obstruction of access indemnity insurance policy, the borrower must be informed accordingly.
- the level of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- 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 not contain terms that you recognise would void or compromise the interests of the lender
- your firm is required to disclose to the insurer all relevant information which you have gathered
- you must point out to the borrower that the borrower must comply with any conditions of the obstruction of access indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- your firm must provide a copy of the obstruction of access indemnity insurance to the borrower and explain to the borrower why the obstruction of access indemnity insurance policy was effected and that a further policy could be necessary if there is further lending against the security of the property
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Coutts & Co | 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. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Hampden | The open market value of the property according to the valuation report. |
| Lloyds | The value of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| 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 Agency Services | 110% of the purchase price or valuation, whichever is greater |
| NRAM Ltd | 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. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| TSB | The value of the property |
| RBS (One Account) | An amount equal to the value of the property. |
General Obstruction of Access indemnity insurance points to consider
The full terms, conditions and exclusions for obstruction of access indemnity insurance are set out in the policy document. Property lawyers should point your non-lender client to the obstruction of access indemnity insurance policy paperwork. The intention of obstruction of access indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to determine that it is correct. The continuance of this non-investment insurance agreement 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.Significant features and benefits of obstruction of access Contingency insurance :
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 are likely to cover the following- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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.
- Money paid with consent in writing from the insurance company to liberate the land 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 due to the successful enforcement of the risks specified in the obstruction of access indemnity insurance.
- Cover for compensation incurred in any action in respect of the risks specified in the obstruction of access indemnity insurance, as well as legal and associated costs.
As is the case with all conventional insurance, 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 not be valid.
Obstruction of Access Indemnity Insurance has limitations - Supplemental considerations
Obstruction of Access Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing 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 is in relation to properties in England and Wales.