Road Charges Indemnity Insurance Lender conveyancing requirements
HSBC and Bank of Scotland, as with most lenders, dictate their own specific instructions when it comes to road charges indemnity insurance. The content herein aims to help residential conveyancing practitioners on the various mortgage company conveyancing panel where the title to be charged contains road charges. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, for example Virgin Money, Nationwide or Barnsley BS. The content on this page is not focused on road charges indemnity insurance requirements.
Need help with road charges indemnity insurance from your lender?
Natwest and Yorkshire Building Society in common with the majority of lenders, instructions are such that where road charges indemnity insurance is to be put on risk:
- the road charges indemnity insurance policy should not contain terms that you are aware would invalidate or compromise the interests of the bank
- the road charges indemnity insurance policy must be placed on risk at no cost to the bank
- you is duty bound to point out 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 bank of any notice or potential claim in relation to the policy
- your practice are responsible for approving the terms of the road charges policy on behalf of the lender
- your practice must provide a duplicate of the road charges indemnity insurance to the borrower and explain to the borrower why the road charges indemnity insurance policy was effected and that a further policy may be mandatory if there is further lending against the mortgaged property
- the road charges indemnity insurance policy must be in favor of the bank and, if possible, for the benefit of the borrower and any future owner or mortgage company. Where the mortgagor will not be covered by the road charges indemnity insurance policy, the borrower needs to be advised accordingly.
- the minimum level of cover for the policy must meet 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 obtained
| Lender | Requirement |
|---|---|
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bradford & Bingley | Amount of loan + 15% |
| Coventry Building Society | Minimum of the value of the property. |
| Halifax | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| 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. |
| 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. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS - Direct Line One | 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 |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Yorkshire Bank | Open market value of property. |
General Road Charges indemnity insurance points to consider
The extent of the terms for road charges indemnity insurance are set out in the policy document. Conveyancing solicitors should point the borrower to the road charges indemnity insurance policy paperwork. The intention of road charges indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check the document to ensure it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Significant aspects and benefits of road charges Contingency 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 Cover normally includes- Market value reduction resulting from the successful enforcement of the risks specified in the road charges indemnity insurance.
- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the road charges indemnity insurance, to the extent that such costs are rendered abortive by court order.
- 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 out of pocket expenses of altering or taking down 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.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the road charges policy, as well as legal and associated costs.
You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully before any claim is met.
Road Charges Indemnity Insurance has limitations - Further considerations
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 Regulated law firms in England and Wales on the the lender 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 covers to properties in England and Wales.