Bank conveyancing panel conditions re Contingent Buildings Indemnity Insurance
Halifax and Leeds Building Society, in common with the majority of banks, set their own specific instructions when it comes to contingent buildings indemnity insurance. The purpose of this page to assist residential conveyancing practitioners on the numerous bank approved list of panel lawyers where the title for the the property to be mortgaged contains contingent buildings. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Godiva Mortgages, Santander or Accord. The content on this page is not focused on contingent buildings indemnity insurance requirements.
Need help with contingent buildings indemnity insurance from your lender?
Birmingham Midshires and Bank of Scotland as with the majority of banks, instructions are such that where contingent buildings indemnity insurance is to be taken out:
- the contingent buildings indemnity insurance policy should always be for the benefit of the lender and, if possible, for the benefit of the borrower and any next owner or mortgage company. Where the borrower will not be protected by the contingent buildings indemnity insurance policy, you must advise the mortgagor of this fact.
- the contingent buildings indemnity insurance policy must be effected at no charge to the bank
- your practice is duty bound to spell out to the mortgagor that the borrower must adhere to any conditions of the contingent buildings indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- your practice must supply a duplicate of the contingent buildings indemnity insurance to the mortgagor and explain to the borrower why the contingent buildings indemnity insurance policy was effected and that a further policy may be mandatory if there is additional lending against the security of the property
- your firm must reveal to the insurer all relevant information which you have obtained
- the minimum level of cover for the policy must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the contingent buildings indemnity insurance policy should not contain conditions which you recognise would invalidate or compromise the interests of the bank
- you are responsible for approving the terms of the contingent buildings policy on behalf of the lender
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Holmesdale Building Society | 110% |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| 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. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Royal Bank of Scotland | 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. |
| RBS - Virgin One | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for contingent buildings indemnity insurance are identified in the policy document. Property lawyers should direct the borrower to the contingent buildings indemnity insurance policy itself. Contingent Buildings Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to ensure it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the contingent buildings indemnity insurance policy. Adequacy in this regard should be checked.Important aspects and benefits of contingent buildings 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. Contingent Buildings indemnity insurance Cover normally includes- 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.
- Expenses for works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the contingent buildings policy, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the contingent buildings indemnity insurance.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the contingent buildings policy, including legal and associated costs.
- Diminution in value resulting from the successful enforcement of the risks specified in the contingent buildings insurance.
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Contingent Buildings Indemnity Insurance has limitations - Supplemental considerations
Contingent Buildings Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for Regulated law firms 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 contingent buildings 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.