Obstruction of Access Indemnity Insurance Mortgage Company conveyancing requirements
Virgin Money and Bank of Scotland, like most mortgage companies, set their own requirements when it comes to obstruction of access indemnity insurance. This page is designed to help property law lawyers on the different lender solicitors 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, for example Birmingham Midshires, Barnsley BS or Godiva Mortgages. 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?
Chelsea BS and Skipton like many banks, requirements are that where obstruction of access indemnity insurance is to be taken out:
- the obstruction of access indemnity insurance policy must not incorporate terms that you recognise would void or compromise the interests of the bank
- the obstruction of access indemnity insurance policy must be placed on risk at no expense to the bank
- you is duty bound to spell out to the borrower that the borrower must 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 policy
- you are responsible for approving the terms of the obstruction of access policy on behalf of the lender
- the minimum level of cover for the policy must satisfy the requirements for the lender (See Part II Handbook requirements )
- your practice must provide 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 may be necessary if there is further lending against the mortgaged property
- you must reveal to the insurer all relevant information which you have obtained
- the obstruction of access indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the borrower and any next owner or bank. If the borrower will not be protected by the obstruction of access indemnity insurance policy, the mortgagor must be informed accordingly.
| 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. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Halifax Loans | An amount at least equal to the 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. |
| ITL Mortgages | Minimum of the value of the property. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Lloyds | The value of the property. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| 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.]
|
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Non lender-specific considerations
The extent of the terms for obstruction of access indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to direct your non-lender client to the obstruction of access indemnity insurance policy itself. Obstruction of Access Contingency insurance is designed to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of access indemnity insurance policy. Again, please check that this is as you expected.Obstruction of Access indemnity insurance: Important aspects and benefits:
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 Policies are likely to cover the following- 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.
- Reimbursement for compensation incurred in any proceedings in respect of 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 the written consent of the relevant insurer
- The cost 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.
- Loss in market value due to the successful enforcement of the risks specified in the obstruction of access indemnity insurance.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the obstruction of access insurance.
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 be invalidated.
Further considerations for obstruction of access indemnity insurance
Obstruction of Access insurance may satisfy lenders such as Natwest or Nationwide 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 solicitor 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.