MIGs are taken out as part and parcel of a mortgage loan transaction. These loans are normally secured by a first charge on the property and a personal covenant on the part of the borrower. Where a loan is requested for a very high percentage of the assessed value of a property a MIG is often taken out as added security for the extra 10% or so which is lent over and above the proportion which would normally be lent by the lender. In Europe Mortgage May, J., held, in line with the weight of authority on the point thus far, that the valuers could not avail themselves of the benefit of the MIG policy, and so could not thereby reduce the claim being made against them for negligence by the lender. In doing so he followed the longstanding authority of Parry v. Cleaver,2 finding the MIG to be collateral, and therefore something which should not be brought into account. This, in effect, led him to dismiss the arguments addressed to him on causation which had been successful against the lenders in Alliance & Leicester v. Edgestop.3

May, J., appeared to be of the view that a MIG would be collateral regardless of whether it could be correctly categorized as an insurance or a guarantee. It is submitted that this is not in fact the case, and that if in fact the policy were correctly construed as a guarantee the situation would be wholly different. However, it is not intended to examine this proposal in this particular piece, and it should be made clear at this stage that what follows proceeds on the premise that the MIG policy under scrutiny may be correctly categorized as a policy of insurance. It is not intended that the following should be seen as applying to all agreements which are described by the parties to them as Mortgage Indemnity Guarantee policies (or any other such generic title). It will be a question of construction in each case as to what the true nature of the particular agreement is. It is only on the true construction of the particular policy that the ambit of that particular agreement can be defined.