Mortgage Company conveyancing panel conditions re Pre-deceasing Risks Indemnity Insurance
Leeds Building Society and Natwest, like most mortgage companies, dictate their own requirements when it comes to pre-deceasing risks indemnity insurance. This page is designed to help domestic conveyancing solicitors on the numerous lender conveyancing panel where the title for the the property to be mortgaged includes pre-deceasing risks. Solicitors should still check the CML handbook requirements for each lender, whether it be Barclays, Accord or Skipton. The information on this page is not focused on pre-deceasing risks indemnity insurance requirements.
Need help with pre-deceasing risks indemnity insurance from your lender?
Chelsea BS and Virgin Money in common with most banks, instructions are such that where pre-deceasing risks indemnity insurance is to be put on risk:
- the pre-deceasing risks indemnity insurance policy should always be in favor of the bank and, wherever possible, in favour of the borrower and any future owner or lender. If the borrower will not be covered by the pre-deceasing risks indemnity insurance policy, the mortgagor should be advised accordingly.
- your firm must point out to the borrower that the borrower is obliged to comply with any conditions of the pre-deceasing risks indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the policy
- you must provide a copy of the pre-deceasing risks indemnity insurance to the mortgagor and explain to the mortgagor why the pre-deceasing risks indemnity insurance policy was effected and that a further policy might be mandatory if there is further lending against the mortgaged property
- your firm must approve the terms of the pre-deceasing risks policy on behalf of the lender
- the limit of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the pre-deceasing risks indemnity insurance policy should be effected at no cost to the mortgage company
- the pre-deceasing risks indemnity insurance policy must not contain conditions that you are aware would invalidate or compromise the interests of the bank
- you is obliged to disclose to the insurer all relevant information which you have gathered
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Coventry Building Society | Minimum of the value of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| 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. |
| Holmesdale Building Society | 110% |
| Landmark | 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. |
| 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. |
| National Westminster Bank | An amount equal to the value of the property. |
| 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. |
| 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). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| 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. |
Pre-deceasing Risks Contingency Insurance : Reflections
The extent of the terms for pre-deceasing risks indemnity insurance are shown in the policy paperwork. Conveyancing solicitors should direct the borrower to the pre-deceasing risks indemnity insurance policy document. Pre-deceasing Risks Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to determine that it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the pre-deceasing risks indemnity insurance policy. Adequacy in this regard should be checked.Significant features and benefits of pre-deceasing risks 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. Pre-deceasing Risks indemnity insurance Policies should be checked for the following- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the pre-deceasing risks policy, to the extent that such costs are rendered abortive by court order.
- Market value reduction due to the successful enforcement of the risks specified in the pre-deceasing risks insurance.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the pre-deceasing risks insurance, as well as solicitors charges.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The out of pocket expenses of altering or taking down 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 the written consent of the insurance company to free the land from the risks specified in the pre-deceasing risks 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 pre-deceasing risks policy will be invalidated.
Additional considerations for pre-deceasing risks indemnity insurance
Pre-deceasing Risks insurance may satisfy lenders such as Birmingham Midshires or HSBC 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 conveyancers and solicitors in England and Wales on the the bank 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 pre-deceasing risks Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above covers to properties in England and Wales.