Road Charges Indemnity Insurance Lender conveyancing requirements
Leeds Building Society and Godiva Mortgages, like most mortgage companies, set their own requirements when it comes to road charges indemnity insurance. This page sets out to enlighten residential conveyancing practitioners on the various bank solicitors panel where the title for the the property to be mortgaged incorporates road charges. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be HSBC, Birmingham Midshires or Barnsley BS. The information on this page Is not to be read as road charges indemnity insurance advice.
Need help with road charges indemnity insurance from your lender?
Lloyds TSB and Skipton as with the majority of lenders, instructions are such that where road charges indemnity insurance is effected:
- the road charges indemnity insurance policy should be effected without expense to the mortgage company
- your firm must approve the terms of the road charges policy on behalf of the bank
- your firm must send a duplicate of the road charges indemnity insurance to the borrower and explain to the mortgagor why the road charges indemnity insurance policy was effected and that additional insurance may be mandatory if there is supplemental lending against the security of the property
- your practice is duty bound to explain to the mortgagor that the borrower is obliged to comply with any conditions of the road charges indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- the road charges indemnity insurance policy should always be in favor of the bank and, wherever possible, for the benefit of the borrower and any future owner or lender. Where the borrower will not be covered by the road charges indemnity insurance policy, the borrower should be advised accordingly.
- your firm must disclose to the insurer all relevant information which you have obtained
- the road charges indemnity insurance policy must not incorporate terms which you are aware would void or compromise the interests of the lender
- the level of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| 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. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Lloyds | The value of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Molo Finance 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 mortgages. |
| Mortgage Express | Amount of loan + 15% |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Scottish Building Society | Amount of mortgage plus 25%. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
General Road Charges indemnity insurance points to consider
The full terms, conditions and exclusions for road charges indemnity insurance are set out in the policy paperwork. Property lawyers are obliged to direct the borrower to the road charges indemnity insurance policy itself. Road Charges indemnity insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to determine that it is in order. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the road charges indemnity insurance policy. It is well worth checking that the time frame is correct.Significant features and benefits of road charges indemnity insurance :
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. Road Charges indemnity insurance Policies are likely to cover the following- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the road charges insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the road charges policy, to the extent that such costs are rendered abortive by court decision.
- Reimbursement for compensation incurred in any action regarding the risks specified in the road charges indemnity insurance, including fees of a legal nature.
- Market value reduction due to the successful enforcement of the risks specified in the road charges policy.
- 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.
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 road charges policy will not be valid.
Road Charges Indemnity Insurance has limitations - Other considerations
Road Charges insurance may satisfy lenders such as Bank of Scotland 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 Regulated law firms in England and Wales on the the mortgage company solicitor 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 road charges 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.