Mortgage Company conveyancing panel conditions re Pre-deceasing Risks Indemnity Insurance
Yorkshire Bank Home Loans and HSBC, as with many mortgage companies, have their own specific instructions when it comes to pre-deceasing risks indemnity insurance. This page sets out to enlighten domestic conveyancing lawyers on the various mortgage company solicitors panel where the title to be charged incorporates pre-deceasing risks. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Bank of Scotland, Godiva Mortgages or Leeds Building Society. The content on this page is not focused on pre-deceasing risks indemnity insurance requirements.
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Barnsley BS and Coventry BS as with many mortgage companies, requirements are that where pre-deceasing risks indemnity insurance is effected:
- you is duty bound to explain to the mortgagor that the borrower must comply with any conditions of the pre-deceasing risks indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the policy
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- the pre-deceasing risks indemnity insurance policy must not incorporate conditions which you recognise would invalidate or prejudice the interests of the mortgage company
- you must approve the terms of the pre-deceasing risks policy on behalf of the mortgage company
- the pre-deceasing risks indemnity insurance policy should always be for the benefit of the bank and, wherever possible, for the benefit of the mortgagor and any next registered proprietor or bank. Where the borrower will not be protected by the pre-deceasing risks indemnity insurance policy, you must advise the borrower of this fact.
- your firm 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 additional insurance may be necessary if there is further borrowing against the mortgaged property
- the pre-deceasing risks indemnity insurance policy should be effected without cost to the bank
- the minimum level of cover for the policy must meet the requirements for the bank (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bluestone Mortgages | 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. |
| Cynergy Bank | The market value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| JPMorgan | 110% of principal sum. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Lloyds | 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. |
| 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). |
| Perenna | The higher of the purchase price or valuation. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| 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. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Whistletree | The value of the property |
Pre-deceasing Risks Contingency Insurance : Reflections
The full terms, conditions and exclusions for pre-deceasing risks indemnity insurance are set out in the policy paperwork. Property lawyers should point 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 specified in the policy schedule - so you should check any draft 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. It is well worth checking that the time frame is correct.Significant aspects and benefits of pre-deceasing risks indemnity insurance :
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 are likely to cover the following- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Diminution in value due to the successful enforcement of the risks specified in the pre-deceasing risks insurance.
- The out of pocket expenses 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.
- Cover for compensation incurred in any proceedings regarding the risks specified in the pre-deceasing risks policy, as well as fees of a legal nature.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the pre-deceasing risks indemnity insurance.
- Expenses for 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 policy, to the extent that such costs are rendered abortive by court decision.
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being paid out.
Further 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 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 above information covers to properties in England and Wales.