Bank conveyancing panel requirements re Pre-deceasing Risks Indemnity Insurance
Bank of Scotland and Leeds Building Society, like many banks, dictate their own specific instructions when it comes to pre-deceasing risks indemnity insurance. This page is designed to help property law solicitors on the numerous bank solicitors panel where the title to be charged includes pre-deceasing risks. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it HSBC, Yorkshire Bank Home Loans or Virgin Money. The content on this page is not focused on pre-deceasing risks indemnity insurance requirements.
Need help with pre-deceasing risks indemnity insurance from your lender?
Halifax and Accord in common with many banks, requirements are that where pre-deceasing risks indemnity insurance is to be taken out:
- you is required to reveal to the insurer all relevant information which you have gathered
- you must provide a duplicate of the pre-deceasing risks indemnity insurance to the borrower and explain to the mortgagor why the pre-deceasing risks indemnity insurance policy was effected and that additional insurance might be necessary if there is additional lending against the mortgaged property
- the limit of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the pre-deceasing risks indemnity insurance policy must be in favor of the lender and, if possible, in favour of the borrower and any subsequent registered proprietor or mortgagee. If the borrower will not be covered by the pre-deceasing risks indemnity insurance policy, you must advise the borrower of this fact.
- you must point out to the borrower that the borrower will need to adhere to 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 approve the terms of the pre-deceasing risks policy on behalf of the mortgage company
- the pre-deceasing risks indemnity insurance policy must be effected at no charge to the lender
- the pre-deceasing risks indemnity insurance policy should not incorporate terms that you know would void or compromise the interests of the lender
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| 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. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| 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. |
| 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 |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| 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). |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| 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. |
| RBS- First Active | An amount equal to the value of the property. |
Pre-deceasing Risks Contingency Insurance : Reflections
The extent of the terms for pre-deceasing risks indemnity insurance are set out in the policy document. Property lawyers are obliged to point the borrower to the pre-deceasing risks indemnity insurance policy itself. Pre-deceasing Risks indemnity insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so you should check any draft to determine that it is in order. The continuance of this non-investment insurance contract 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: Important characteristics and benefits:
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Pre-deceasing Risks indemnity insurance Policies are likely to cover the following- Diminution in value resulting from the successful enforcement of the risks specified in the pre-deceasing risks indemnity insurance.
- Expenses for 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 insurance, to the extent that such costs are rendered abortive by court decision.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Cover for compensation incurred in any proceedings in respect of the risks specified in the pre-deceasing risks insurance, including solicitors charges.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the pre-deceasing risks insurance.
- The out of pocket expenses 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.
Due diligence should extend to checking that the answers on the application form are correct. However remote the likelihood of a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly prior to any claim being admitted.
Other considerations for pre-deceasing risks indemnity insurance
Pre-deceasing Risks insurance may satisfy lenders such as Skipton or Natwest 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. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company conveyancing 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.