Lender conveyancing panel conditions re Road Charges Indemnity Insurance

Natwest and Yorkshire Bank Home Loans, as with many lenders, have their own specific instructions when it comes to road charges indemnity insurance. This page is designed to help residential conveyancing firms on the numerous bank conveyancing panel where the title for the the property to be mortgaged incorporates road charges. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Santander, RBS or Godiva Mortgages. The information on this page Is not to be read as road charges indemnity insurance advice.

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Bank of Scotland and Coventry BS in common with many banks, obligations require that where road charges indemnity insurance is to be taken out:

the road charges indemnity insurance policy must be for the benefit of the mortgage company and, if possible, in favour of the borrower and any future owner or lender. If the mortgagor will not be protected by the road charges indemnity insurance policy, you must advise the borrower of this fact.
you is duty bound to spell 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
your firm must approve the terms of the road charges policy on behalf of the lender
your firm must supply 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 might be necessary if there is additional borrowing against the mortgaged property
the road charges indemnity insurance policy must be effected at no charge to the lender
the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
your practice must reveal to the insurer all relevant information which you have gathered
the road charges indemnity insurance policy should not incorporate terms that you are aware would invalidate or prejudice the interests of the bank

As to the level of cover for the road charges indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for mortgage companies:

Lender	Requirement
Ahli United Bank	An amount equal to the value of the Mortgaged Property
April Mortgages	An amount at least equal to the mortgage advance.
Atom Bank	At least the open market value of the property according to the valuation report.
Better HomeOwnership	An amount to cover the mortgage advance as a minimum.
Coventry Building Society	Minimum of the value of the property.
DB UK Bank	An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable
Furness Building Society	Property valuation or purchase price, whichever the greater.
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.
Holmesdale Building Society	110%
Kent Reliance	An amount at least equal to 110% of the mortgage valuation.
Landbay Partners	An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%.
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.
MPowered Mortgages	Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher).
Manchester Building Society	Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%.
Platform	110% of principal sum.
Rely 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.
RBS - Direct Line	An amount equal to the value of the property.
RBS- First Active	An amount equal to the value of the property.

Non lender-specific considerations

The full terms, conditions and exclusions for road charges indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to point your non-lender client to the road charges indemnity insurance policy itself. The intention of road charges indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.

Road Charges indemnity insurance: Significant aspects 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. Road Charges indemnity insurance Policies are likely to cover the following

All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the road charges insurance, to the extent that such costs are rendered abortive by court order.
Liability for damages or compensation incurred in any proceedings regarding the risks specified in the road charges policy, as well as incurred costs and expenses.
All sums paid with the written consent of the insurance company to free the land from the risks specified in the road charges indemnity 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.
Diminution in value due to the successful enforcement of the risks specified in the road charges policy.

As is the case with all conventional insurance, 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 - Additional 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 right solution.

Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company 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 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 covers to properties in England and Wales.