Indemnity Insurance of Pre-deceasing Risks Lender conveyancing instructions
Skipton and Yorkshire Building Society, as with most banks, have their own specific instructions when it comes to pre-deceasing risks indemnity insurance. This page is designed to help property law firms on the numerous bank approved list of panel lawyers where the title to be charged contains pre-deceasing risks. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Godiva Mortgages, Halifax or Leeds Building Society. The information 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?
Bank of Scotland and Barnsley BS in common with the majority of mortgage companies, requirements are that where pre-deceasing risks indemnity insurance is to be put on risk:
- you is duty bound to point out to the mortgagor that the borrower must adhere to any conditions of the pre-deceasing risks indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
- the level of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- you are responsible for approving the terms of the pre-deceasing risks policy on behalf of the bank
- the pre-deceasing risks indemnity insurance policy must be placed on risk at no cost to the mortgage company
- the pre-deceasing risks indemnity insurance policy should always be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any next registered proprietor or bank. If the borrower will not be covered by the pre-deceasing risks indemnity insurance policy, the borrower needs to be informed accordingly.
- your practice must supply 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 may be required if there is further borrowing against the mortgaged property
- the pre-deceasing risks indemnity insurance policy must not incorporate conditions that you recognise would invalidate or compromise the interests of the mortgage company
- your firm is required to disclose to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Britannia | Cover to the full value of the property. |
| Clydesdale Bank | Open market value of property. |
| Coventry Building Society | Minimum of the value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| JPMorgan | 110% of principal sum. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| 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. |
| Perenna | The higher of the purchase price or valuation. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Yorkshire Building Society | 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for pre-deceasing risks indemnity insurance are shown in the policy paperwork. Property lawyers should direct the borrower to the pre-deceasing risks indemnity insurance policy itself. Pre-deceasing Risks indemnity insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Pre-deceasing Risks indemnity insurance: Important features and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the pre-deceasing risks indemnity insurance schedule. Pre-deceasing Risks indemnity insurance Policies should be checked for the following- Liability for damages or compensation incurred in any action regarding the risks specified in the pre-deceasing risks policy, including solicitors charges.
- 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 decision.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the pre-deceasing risks insurance.
- 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.
- Diminution in value resulting from the successful enforcement of the risks specified in the pre-deceasing risks policy.
Don't forget to check what is not included in the pre-deceasing risks insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Supplemental considerations for pre-deceasing risks indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from pre-deceasing risks insurance may be adequate for your client. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender approved 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 content set out above covers to properties in England and Wales.