Mortgage Requirement - Index-linked Home Insurance

Maz63934

Afternoon,

We're currently in the process of buying our first home and we've hit a stumbling point just before exchange.

The problem is our Santander mortgage offer states that the house must be "insured against loss and damage on an Index-linked bases." We've found plenty of insures that will insure it upto £1 million (over 4x the houses value) but we're really struggling to find any home insurance where the policy states that it is index-linked. The only one we have found is with Aviva but is nearly 4 times the price of the other quotes we have so far.

Our solicitor is refusing to go forward with any other house insurance unless it clearly states that it is index-linked. I understand she is covering her back here but Santander refuse to comment to us if the £1 million cover is acceptable and our solicitor won't contact them.

I assume thousands have mortgages with Santander so was wondering if anyone on here has had a similar issue?

Thanks in advance,
Tom

ACG

Take out aviva, then replace it. 
You know you are covered, I cant see Santander ever finding out and if they did, I cant see them bothered.

amnblog

The Santander Offer notes do say that, but I have no idea why.

Your buildings insurance will be a 12 month contract. Quite how you index link such an arrangement is perhaps one for your Solicitor to ponder. She sounds like an idiot.

I imagine she will not exchange contracts without being happy so your options are most likely:

Insist and she what she says
Change Solicitors
Take a Policy she likes, then swop it out after as suggested.

jimjames

If you can time exchange and completion correctly then you may be able to get the completion within the 14 days cooling off period to cancel the insurance and take out another policy. As above it's daft that what is an annual policy has this sort of restriction.

Maz63934

Thanks all. At least I know it's not just me being difficult. What makes the whole thing funny is that even Santander's own home insurance is not index linked.

[Deleted User]

From my experience most solicitors just want confirmation of the policy you intend to take.  Most wont insist on the policy being actively purchased. Just a copy of the quote and the policy conditions is usually sufficient.  

When you exchange then just set up whichever one you want

[Deleted User]

also, this is the first time I have heard this condition which appears to be standard for Santander.  Obviously every solicitor I have sent a santander offer to has completely disregarded it as the policy i use isnt index linked

kingstreet

IIRC it's CML requirement 6.14.2.

The policy conforms to all requirements set out in clause 6.14.2 of the Council of Mortgage Lenders Handbook part 1 and total sum insured under the buildings and/or contents section(s) of the policy is adjusted where appropriate to take account of inflation (‘index linked’) annually.

Maz63934

kingstreet said:

IIRC it's CML requirement 6.14.2.

The policy conforms to all requirements set out in clause 6.14.2 of the Council of Mortgage Lenders Handbook part 1 and total sum insured under the buildings and/or contents section(s) of the policy is adjusted where appropriate to take account of inflation (‘index linked’) annually.

So in theory all home insurance policies are index-linked as they to comply with this standard?

user1977

Bit of an odd requirement given there's no expectation you'll have the same policy year after year, or that you can't manually amend the amount covered?

kingstreet

I think it is suggesting the renewal should be offered with an RPI increase in the sum insured each year.