Contingent Buildings Indemnity Insurance Mortgage Company conveyancing requirements
Barnsley BS and Yorkshire Building Society, in common with the majority of lenders, dictate their own requirements when it comes to contingent buildings indemnity insurance. The content herein aims to help residential conveyancing firms on the different mortgage company solicitors panel where the title for the the property to be mortgaged contains contingent buildings. It is not a alternative for checking the CML handbook requirements for each lender, for example Santander, Godiva Mortgages or RBS. The information on this page is not focused on contingent buildings indemnity insurance requirements.
Need help with contingent buildings indemnity insurance from your lender?
Coventry BS and Skipton like many mortgage companies, requirements are that where contingent buildings indemnity insurance is effected:
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- the contingent buildings indemnity insurance policy should always be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any future registered proprietor or lender. Where the borrower will not be covered by the contingent buildings indemnity insurance policy, the borrower must be informed accordingly.
- your firm is obliged to reveal to the insurer all relevant information which you have acquired
- the contingent buildings indemnity insurance policy should be placed on risk at no cost to the mortgage company
- the contingent buildings indemnity insurance policy should not incorporate conditions that you recognise would invalidate or prejudice the interests of the lender
- you must supply a copy 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 might be required if there is supplemental borrowing against the security of the property
- you are responsible for approving the terms of the contingent buildings policy on behalf of the mortgage company
- you must point out to the borrower that the borrower must comply with any conditions of the contingent buildings indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Holmesdale Building Society | 110% |
| JPMorgan | 110% of principal sum. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| Lloyds TSB Scotland | The value of the property |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| National Westminster Bank | An amount equal to the 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. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS - Direct Line | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
Non lender-specific considerations
The extent of the terms for contingent buildings indemnity insurance are set out in the policy paperwork. Conveyancing solicitors should direct the borrower to the contingent buildings indemnity insurance policy document. Contingent Buildings Contingency insurance is devised to afford indemnity in respect of the risks set out in the policy schedule - so you should check the document 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 contingent buildings indemnity insurance policy. Adequacy in this regard should be checked.Contingent Buildings Contingency insurance: Important aspects and benefits:
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 Policies are likely to cover the following- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, 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 decision.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the contingent buildings policy, including incurred costs and expenses.
- Market value reduction due to the successful enforcement of the risks specified in the contingent buildings indemnity insurance.
- 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.
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the contingent buildings indemnity insurance.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the lender 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.
Other considerations for contingent buildings indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from contingent buildings insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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.