Bank conveyancing panel requirements re Contingent Buildings Indemnity Insurance
Leeds Building Society and Lloyds TSB, in common with the majority of lenders, have their own specific instructions when it comes to contingent buildings indemnity insurance. This page sets out to enlighten residential conveyancing solicitors on the different lender conveyancing panel where the title for the the property to be mortgaged incorporates contingent buildings. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, be it Birmingham Midshires, Chelsea BS or Bank of Scotland. The content on this page Is not to be read as contingent buildings indemnity insurance advice.
Need help with contingent buildings indemnity insurance from your lender?
Barclays and RBS in common with many mortgage companies, instructions are such that where contingent buildings indemnity insurance is to be put on risk:
- you must approve the terms of the contingent buildings policy on behalf of the mortgage company
- the contingent buildings indemnity insurance policy must be effected without charge to the lender
- you must reveal to the insurer all relevant information which you have acquired
- the contingent buildings indemnity insurance policy should not contain conditions that you know would invalidate or prejudice the interests of the lender
- the contingent buildings indemnity insurance policy should always be in favor of the bank and, if possible, for the benefit of the mortgagor and any subsequent owner or mortgage company. Where the borrower will not be covered by the contingent buildings indemnity insurance policy, the mortgagor needs to be advised accordingly.
- your firm is duty bound to explain to the borrower that the borrower is obliged to adhere to any conditions of the contingent buildings indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
- your practice must send a copy of the contingent buildings indemnity insurance to the borrower and explain to the mortgagor why the contingent buildings indemnity insurance policy was effected and that additional insurance might be mandatory if there is supplemental borrowing against the mortgaged property
- the limit of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| Cynergy Bank | The market value of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Holmesdale Building Society | 110% |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| LendInvest | An amount at least equal to the valuation of the property. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| RBS (One Account) | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Non lender-specific considerations
The full terms, conditions and exclusions for contingent buildings indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point the borrower to the contingent buildings indemnity insurance policy paperwork. The intention of contingent buildings indemnity insurance is to provide indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to ensure it is correct. The lifetime 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.Significant features and benefits of contingent buildings Contingency insurance :
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Contingent Buildings indemnity insurance Policies are likely to cover the following- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Loss in market value resulting from the successful enforcement of the risks specified in the contingent buildings insurance.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the contingent buildings indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Liability for damages or compensation incurred in any action concerning the risks specified in the contingent buildings policy, including fees of a legal nature.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the contingent buildings indemnity insurance.
- The cost 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.
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 contingent buildings policy will not be valid.
Contingent Buildings Indemnity Insurance has limitations - Further considerations
Contingent Buildings Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within 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 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 above information covers to properties in England and Wales.