Bank conveyancing panel requirements re Road Charges Indemnity Insurance
Barclays and Yorkshire Bank Home Loans, as with many banks, dictate their own specific instructions when it comes to road charges indemnity insurance. This page sets out to enlighten property law lawyers on the different mortgage company conveyancing panel where the title for the the property to be mortgaged includes road charges. It is not a substitute for checking the CML handbook requirements for each bank, for example Halifax, Bank of Scotland or Nationwide. 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?
Natwest and Coventry BS like the majority of banks, instructions are such that where road charges indemnity insurance is to be put on risk:
- you must send a copy of the road charges indemnity insurance to the mortgagor and explain to the mortgagor why the road charges indemnity insurance policy was effected and that a further policy may be necessary if there is additional borrowing against the mortgaged property
- the road charges indemnity insurance policy needs to be in favor of the lender and, wherever possible, in favour of the mortgagor and any next registered proprietor or mortgagee. If the borrower will not be protected by the road charges indemnity insurance policy, you must advise the mortgagor of this fact.
- the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- the road charges indemnity insurance policy should be placed on risk at no cost to the lender
- the road charges indemnity insurance policy should not contain terms which you recognise would void or prejudice the interests of the bank
- your firm is required to reveal to the insurer all relevant information which you have gathered
- your practice are responsible for approving the terms of the road charges policy on behalf of the lender
- your firm must point out to the mortgagor that the borrower is obliged to adhere to any conditions of the road charges indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Barclays plc | Higher of purchase price or valuation |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| 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. |
| 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 (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| NRAM Ltd | 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. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Platform | 110% of principal sum. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS (One Account) | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Non lender-specific considerations
The extent of the terms 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 Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so you should check any draft to ensure it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the road charges indemnity insurance policy. It is well worth checking that the time frame is correct.Important aspects 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- Reimbursement for compensation incurred in any action in respect of the risks specified in the road charges insurance, as well as solicitors charges.
- Market value reduction due to the successful enforcement of the risks specified in the road charges indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- All sums paid with consent in writing from the insurance company to free the property from the risks specified in the road charges indemnity insurance.
- 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.
- The cost 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.
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 - Supplemental considerations
Road Charges Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that road charges indemnity cover will not necessarily be the answer. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank approved 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 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.