Indemnity Insurance of Road Charges Lender conveyancing obligations
Accord and Birmingham Midshires, as with the majority of mortgage companies, dictate their own requirements when it comes to road charges indemnity insurance. This page is designed to help domestic conveyancing solicitors on the numerous mortgage company approved list of panel lawyers where the title to be charged incorporates road charges. Solicitors should still check the CML handbook requirements for each bank, whether it be Barclays, Yorkshire Building Society or Bank of Scotland. The content on this page is not focused on road charges indemnity insurance requirements.
Need help with road charges indemnity insurance from your lender?
Coventry BS and Yorkshire Bank Home Loans in common with most mortgage companies, requirements are that where road charges indemnity insurance is to be taken out:
- your practice 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 additional insurance could be required if there is further borrowing against the mortgaged property
- the road charges indemnity insurance policy must be in favor of the mortgage company and, if possible, in favour of the mortgagor and any subsequent owner or mortgage company. Where the borrower will not be covered by the road charges indemnity insurance policy, you must advise the mortgagor of this fact.
- the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice is required to disclose to the insurer all relevant information which you have acquired
- the road charges indemnity insurance policy should not contain terms which you know would invalidate or prejudice the interests of the bank
- your practice are responsible for approving the terms of the road charges policy on behalf of the bank
- the road charges indemnity insurance policy should be placed on risk without cost to the mortgage company
- your firm is duty bound to explain 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 bank of any notice or potential claim in relation to the insurance
| Lender | Requirement |
|---|---|
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| 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. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Darlington Building Society | The higher of value or purchase price of the property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Godiva Mortgages | Minimum of the value of the property. |
| Habito | Higher of purchase price or valuation |
| Holmesdale Building Society | 110% |
| ITL Mortgages | Minimum of the value of the property. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds TSB Scotland | 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 |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| The Mortgage Works | The full purchase price/value of the property whichever is 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. |
| RBS (One Account) | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
General Road Charges indemnity insurance points to consider
The full terms, conditions and exclusions for road charges indemnity insurance are explained in the policy paperwork. Conveyancing solicitors should point your non-lender client to the road charges indemnity insurance policy paperwork. The intention of road charges indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule 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 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 :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the road charges indemnity insurance schedule. Road Charges indemnity insurance Policies are likely to cover the following- Cover for compensation incurred in any proceedings regarding the risks specified in the road charges indemnity insurance, including incurred costs and expenses.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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.
- The cost of 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.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the road charges insurance.
- Market value reduction resulting from the successful enforcement of the risks specified in the road charges insurance.
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.
Other considerations for road charges indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from road charges insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender 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 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 content set out above is in relation to properties in England and Wales.