Insolvency Indemnity Insurance

chateauneufdupape

I am in the process of getting my wife onto the deeds of my property. The building society has asked that I provide Insolvency Indemnity Insurance. Whilst I understand it may be required in some cases, in my case I can not see why it would be necessary.

House value = £450k
Mortgage = £90k

So even with only half the value of the house still being mine, the mortgage is only 40% of the value. I am not a director, I have an above average income, Iam an employee, I have a good credit rating and seem very unlikely to go bankrupt.

Can anyone shed any light on this? Also, where can you get Insolvency Indemnity Insurance.

joicey

Hi,

Could you please let me know if you found out why you needed to pay this insurance as the same is happening to my partner and I...

Thanks

joicey

chateauneufdupape

Hi joicey, welcome to MSE.

It still has not been resolved yet. However, I spoke to both the building society and my solicitor and after a lengthy discussion, neither of them could see why it was required. The original request stemmed from the B.Soc's underwriters and it is still with them. I suspect that it is a fairly standard request to protect their interests and has been passed on by the B. Soc and sollicitor to me without any thought being given as to whether or not it is needed.

As you can see from my figures above, I have a lot of equity in my house (20% mortgage) and the building society is at very low risk. As the mortgage % rises, so does their risk. If there was a slump in prices and I had a high % mortgage, I could go into negative equity i.e. the mortgage would be more than the value of the house and if I went bakrupt, the BSoc could lose out. This is extremely unlikely in my case, hence I have questioned the need for the insurance policy. My advice to you would be to question the need for you to have it too. A couple of phone calls could save you a considerable amount of money.

I never found an insurer who offered this insurance. My solicitor just sent me a letter requesting a cheque for £500 to cover the insurance. At which point, I started questioning it.

Hope this has helped a bit.

fruitpie

Two years ago we were in the same situation - I wanted my wife on the deeds. Our solicitor said we needed to cough up for an Indemity Policy - it was 160 quid. We paid up, but have always thought we did not need it - but as they are the "experts" we soon forgot about it !

chateauneufdupape

Just received confirmation today that we are now registered as Tenants In Common. Obviously, they agreed with me that I did not need to have the indemnity insurance! Well worth two phone calls to save £500.

inmypocketnottheirs

Just sounds like another 'scam' to me to get an extra few hundred quid out of you. Bet your bottom dollar that the solicitor or building society would have pocketed a healthy commission!

MoreTeaVicar_2

Hello Chateauneufdupape,

Having read your threads I believe the reason for your solicitor requesting an insurance policy is the issue of transfering your property to your wife and yourself as tenants in common.....which means in equal shares.

The transfer to your wife is for no consideration,being a gift.

There have been some recent Insolvency cases whereby a husband has transfered a family home to his wife or family some twenty years ago.....the husband became insolvent....the Court found that the transaction which was a gift and not for monetory value was a transaction at undervalue pursuant to the Insolvency Act 1986 section 339.

It is very important that transfers are made for full value....I know this may sound rather strange but in the case I am refering to the name of which currently escapes
me....it has set a president for other cases.

you can google 'transaction at undervalue' and should get some helpful advice.

Regards

MoreTeaVicar?

minimike2

This post is three years old....I think they *may* have it sorted already