Pre-deceasing Risks Indemnity Insurance Lender conveyancing requirements
Birmingham Midshires and Barclays, like most banks, set their own requirements when it comes to pre-deceasing risks indemnity insurance. This page sets out to enlighten property law practitioners on the different lender solicitors panel where the title for the the property to be mortgaged contains pre-deceasing risks. It is not a alternative for checking the CML handbook requirements for each lender, whether it be Natwest, Coventry BS or Skipton. The information on this page Is not to be read as pre-deceasing risks indemnity insurance advice.
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Godiva Mortgages and Barnsley BS like the majority of mortgage companies, instructions are such that where pre-deceasing risks indemnity insurance is effected:
- your firm must approve the terms of the pre-deceasing risks policy on behalf of the mortgage company
- the level of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your practice is required to disclose to the insurer all relevant information which you have acquired
- the pre-deceasing risks indemnity insurance policy needs to be in favor of the lender and, wherever possible, for the benefit of the borrower and any future owner or mortgage company. If the borrower will not be protected by the pre-deceasing risks indemnity insurance policy, the borrower needs to be advised accordingly.
- you is duty bound to point out to the mortgagor that the borrower will need to comply with 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 insurance
- you must send a duplicate 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 a further policy might be required if there is additional lending against the mortgaged property
- the pre-deceasing risks indemnity insurance policy must be placed on risk at no charge to the lender
- the pre-deceasing risks indemnity insurance policy should not contain conditions that you are aware would invalidate or compromise the interests of the bank
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Britannia | Cover to the full value of the property. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| JPMorgan | 110% of principal sum. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds | The value of the property. |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Platform | 110% of principal sum. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
General Pre-deceasing Risks indemnity insurance points to consider
The extent of the terms for pre-deceasing risks indemnity insurance are identified in the policy paperwork. Conveyancing solicitors should point your non-lender client to the pre-deceasing risks indemnity insurance policy paperwork. The intention of pre-deceasing risks 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 in order. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the pre-deceasing risks indemnity insurance policy. It is well worth checking that the time frame is correct.Pre-deceasing Risks indemnity insurance: Significant features 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 Policies should be checked for the following- Cover for compensation incurred in any action regarding the risks specified in the pre-deceasing risks policy, as well as solicitors charges.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the pre-deceasing risks policy.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, 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.
- All ancillary 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 pre-deceasing risks policy.
Always check what is not included in the pre-deceasing risks indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Other considerations for pre-deceasing risks indemnity insurance
Pre-deceasing Risks insurance may satisfy lenders such as Nationwide or Yorkshire Building Society 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 mortgage company approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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 is in relation to properties in England and Wales.