Tuesday, October 20, 2009

The Pitfalls of Insuring Against Subsidence By Michael Challiner

Michael Challiner

You may have heard this advice before, but it is so important…..read the small print and check that subsidence is not excluded. You may find, for example, that outbuildings like garages are not covered .


You will not be surprised to learn that premiums will increase following a claim. The chief structural claims manager, Neil Curling, from Halifax Home Insurance, warns that you must disclose material facts, such as signs that walls are cracking or bulging or a history of previous subsidence. Failure to make a full and honest declaration of the condition of a property may result in the policy being declared void.


Subsidence is a expensive condition to remedy, often running into tens of thousands of pounds, so insurers are very reluctant to pay out. Solicitors often have to be called in to stop insurers from reneging on their obligations.


There is no substitute to a full structural survey on a property. Although it may appear to be an expensive luxury, it could pay for itself many times over in the long run. Subsidence may not be recorded on a search as the solicitor acting for the seller may be economical with the truth.


It will be very difficult to obtain buildings cover if a survey reveals that subsidence has taken place.


Nationwide Home Insurance confirmed that they will continue to cover an existing customer if subsidence occurs. They will also provide cover if they receive a satisfactory application from the new owners of the property, which has been purchased from their customer. However they will not provide cover for properties that have suffered from subsidence in the past, which is standard practise throughout the industry.


The following case study illustrates the problems you may encounter when claiming on your buildings insurance.


Jackie Summerfield and partner Paddy Boyle live in the town of Hastings where they own a Victorian house. 10 years ago, when they were tenants, the landlord discovered that the property was suffering from subsidence. Paddy recalls that they actually attended talks when the loss adjuster, who represented the interests of the insurer, and a structural engineer were present. Evidently the loss adjuster felt that only a bay window should be underpinned whereas the structural engineer advised that the property needed far more extensive underpinning.


After the underpinning had been carried out and paid for by the insurer acting for the landlord, Jackie and Paddy bought the property.


The property showed no further signs of distress until two years ago when a horizontal crack appeared in the lounge. Paddy says that he contacted their insurer, Zurich, and the original structural engineer. Although the couple had to pay 1000 pounds excess, Zurich underpinned the house for a further 60,000 pounds. The work took 5 months to complete and they were very happy with the result.


The problems had been caused by their house being founded on a clay soil which had slowly dried out. The shrinkage of the clay had caused the property to settle. Paddy has been delighted with the service provided by Zurich, who were happy to renew his policy. However when he approached other insurers for an alternative quotation they refused to cover the property as it had been underpinned.


Resource: http://www.isnare.com/?aid=343320&ca=Finances

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