Road Charges Indemnity Insurance Lender conveyancing requirements
Natwest and Lloyds TSB, as with the majority of mortgage companies, have their own specific instructions when it comes to road charges indemnity insurance. The purpose of this page to assist conveyancing lawyers 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 lender, be it Birmingham Midshires, Barclays or Yorkshire Bank Home Loans. The information on this page is not focused on road charges indemnity insurance requirements.
Need help with road charges indemnity insurance from your lender?
RBS and Halifax like most mortgage companies, requirements are that where road charges indemnity insurance is to be put on risk:
- your firm must provide a copy 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 might be required if there is further lending against the mortgaged property
- your practice is duty bound to point out to the mortgagor that the borrower must comply with any conditions of the road charges indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- you must approve the terms of the road charges policy on behalf of the bank
- your practice must reveal to the insurer all relevant information which you have gathered
- the road charges indemnity insurance policy should be placed on risk at no charge to the bank
- the road charges indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, for the benefit of the mortgagor and any future registered proprietor or lender. If the mortgagor will not be protected by the road charges indemnity insurance policy, you must advise the borrower of this fact.
- the road charges indemnity insurance policy should not incorporate conditions that you recognise would void or prejudice the interests of the bank
- the minimum level of cover for the policy must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Harpenden Building Society | 110% of mortgage advance |
| Investec | The open market value of the property according to the valuation report. |
| JPMorgan | 110% of principal sum. |
| Landmark | 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. |
| Masthaven Bank | 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Scottish Widows | The value of the property. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Road Charges Contingency Insurance : Reflections
The full terms, conditions and exclusions for road charges indemnity insurance are shown in the policy document. Conveyancing Practitioners are obliged to point your non-lender client to the road charges indemnity insurance policy document. Road Charges Contingency insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Road Charges Contingency insurance: Important characteristics and benefits:
The insurance 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 should be checked for the following- Liability for damages or compensation incurred in any action in respect of the risks specified in the road charges policy, as well as fees of a legal nature.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the road charges indemnity insurance.
- Market value reduction resulting from the successful enforcement of the risks specified in the road charges insurance.
- The cost of works (including professional fees) for the purpose of the development commenced, before the commencement of 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 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.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is admitted.
Additional considerations for road charges indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the road charges policy which are not adequately covered by financial compensation. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender 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 content set out above covers to properties in England and Wales.