UK Home Insurance - Sinking Into The Mire Of Subsidence Cover
By: Trevor Dace
Let me say at the outset, this is an expensive problem. There is a substantial excess, in other words you will be made to pay the initial part of any claim. Most UK home insurance policies now impose an excess of 1,000 but you can shop around for less. I hope you have some money put aside!
Second, your claim is very likely to take months, if not years to resolve. There is a substantial list of exclusion clauses. Here is a typical list. If any of these apply, you are on your own without any payment from your insurer.
No outside gates, paths, drives, patios, terraces, walls etc. are covered if none of your main buildings or outbuildings are damaged.
Subsidence as a result of coastal erosion.
Movement of solid floor slabs unless foundations beneath outside walls are also damaged by the same cause
Bedding down of newly erected buildings or the settling of newly worked ground.
Then there are the little plus points that are included in standard cover. This is where you actually get some accidental damage cover with your standard policy.
As owner of the property you are covered for any damage to service pipes and underground cables
Glass and sanitary fittings. Again you are covered against accidental damage to your built in ceramic hobs, bathroom fixtures and all windows in the building. Take note that, that there is very likely to be a clause later on into the policy that will specify what you are allowed to claim for. Every item is treated as a separate item, not as part of a suite. Thus, if your wash basin is accidentally damaged, don't wait for the company to fork out for a full new bathroom suite!
Stand-By Accommodation. This can be a very important benefit if it becomes dangerous or impossible to stay in your home. The insurance company will pay for alternative accommodation. This could be a nearby hotel or possibly the extra costs to friends and family if they can help out with a roof over your head. At least one insurer will also pay for your pets to go into boarding kennels if necessary. The policy could also offer either loss of rent, if you are a landlord, or payment of rent due. There is a limit, a sum insured which is usually 20% of the total sum insured for your buildings cover.
By the way, if you sell the house, the person who buys it can enjoy the benefits of the policy up to the date of completion provided they have no policy of their own at the time.
BASIS OF SETTLEMENT - All good policies will offer 'reinstatement'. In other words they are offering 'new for old'. The House will be restored with new parts and should the entire structure be beyond economical repair, it will be rebuilt with new materials and no contribution from you (with the exception of any excess due). With some buildings, meeting new regulations might mean increased costs. Not a problem - but it only applies to the damaged part of the building. Demolishing, removing debris, shoring up etc are all covered as are professional fees such as architects and surveyors, legal fees and charges for plans, estimates etc.
Insurers prefer to be in control of the situation so if cracks start appearing in your walls, report it to them immediately. If you go and instruct your own surveyor they might well recommend drastic measures to prop up your house that might not be required. You could end up in dispute with your insurer.
There are countless issues that can arise following a claim involving subsidence. Owing to the amount of time that these claims can take, things such as trying to sell your home, trying to change your insurer and so on can all raise problems. It would take a book to clarify them all. One I will just mention is that if you have moved your cover from one home insurance company to another, the previous company might be required to make a contribution to your claim under the Association of British Insurers Domestic Subsidence Agreement. This prevents disputes between insurers as to who pays for what. You should not be affected by any negotiation between the companies.
But what happens when an underground pipe has leaked and this has led to movement and thus subsidence? What actual peril has occurred and what excess do you have to pay? It is in your interests to show that the loss should fall under the underground services peril. That way you do not have to pay the large excess of a subsidence claim. The policy clause in question is known as the 'proximate cause'. You need to be able to show that the proximate cause of the subsidence is the burst or leaking pipe.
