Lender conveyancing panel requirements re Pre-deceasing Risks Indemnity Insurance
Natwest and Coventry BS, as with most lenders, have their own requirements when it comes to pre-deceasing risks indemnity insurance. The purpose of this page to assist conveyancing solicitors on the different bank solicitors panel where the title to be charged incorporates pre-deceasing risks. It is not a substitute for checking the CML handbook requirements for each bank, be it Lloyds TSB, Virgin Money or Chelsea BS. The content on this page Is not to be read as pre-deceasing risks indemnity insurance advice.
Need help with pre-deceasing risks indemnity insurance from your lender?
Skipton and Yorkshire Building Society as with the majority of mortgage companies, obligations require that where pre-deceasing risks indemnity insurance is to be put on risk:
- the pre-deceasing risks indemnity insurance policy must be effected without charge to the lender
- your firm is duty bound to spell out to the mortgagor that the borrower is obliged to adhere to any conditions of the pre-deceasing risks indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the policy
- the pre-deceasing risks indemnity insurance policy must be for the benefit of the mortgage company and, if possible, in favour of the mortgagor and any future owner or lender. If the borrower will not be protected by the pre-deceasing risks indemnity insurance policy, you must advise the mortgagor of this fact.
- your firm must reveal to the insurer all relevant information which you have obtained
- your practice must provide a copy of the pre-deceasing risks indemnity insurance to the borrower and explain to the borrower why the pre-deceasing risks indemnity insurance policy was effected and that additional insurance could be necessary if there is further lending against the security of the property
- the minimum level of cover for the policy must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your firm are responsible for approving the terms of the pre-deceasing risks policy on behalf of the lender
- the pre-deceasing risks indemnity insurance policy should not incorporate conditions that you are aware would void or prejudice the interests of the mortgage company
| 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. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Cynergy Bank | The market value of the property. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| 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. |
| Godiva Mortgages | Minimum of the value of the property. |
| Harpenden Building Society | 110% of 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| RBS - Direct Line One | An amount equal to the value of the property. |
| RBS- First Active | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Topaz Finance | 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
Pre-deceasing Risks Contingency Insurance : Reflections
The full terms, conditions and exclusions for pre-deceasing risks indemnity insurance are identified in the policy paperwork. Property lawyers should point your non-lender client to the pre-deceasing risks indemnity insurance policy document. The intention of pre-deceasing risks indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft 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.Pre-deceasing Risks Contingency insurance: Significant characteristics 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. Pre-deceasing Risks indemnity insurance Cover normally includes- 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.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the pre-deceasing risks indemnity insurance.
- Loss in market value due to the successful enforcement of the risks specified in the pre-deceasing risks indemnity insurance.
- Liability for damages or compensation incurred in any proceedings regarding the risks specified in the pre-deceasing risks indemnity insurance, including incurred costs and expenses.
- The cost of works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the pre-deceasing risks indemnity insurance, to the extent that such costs are rendered abortive by court order.
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 pre-deceasing risks policy will be invalidated.
Pre-deceasing Risks Indemnity Insurance has limitations - Further considerations
There may be consequences arising from the enforcement of the risks identified in the pre-deceasing risks insurance which are not adequately covered by financial compensation. Information provided on this webpage is for general information for Regulated law firms 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 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 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 above information is in relation to properties in England and Wales.