When there are well over a million claims for damage to buildings in the UK every year (and that is just home insurance) 18,000 of them may seem fairly insignificant, but not if you are one of the unfortunates claiming.
18,000 is the average number of subsidence claims occurring each year, increasing by about 25% when there’s a very hot summer, and this year the numbers of claims could be higher still as ‘catch-up’ activity in the housing market following the pandemic, has led to more surveys and more signs of subsidence being discovered. The numbers are still not enormous but unlike most claims where you are paid out for the repair or replacement of a damaged item, subsidence claims can take years to resolve.
Some claims will be reasonably straightforward if the cause of the subsidence can be identified and easily remedied but others can be drawn out with months or even years of monitoring to establish the cause and decide on the remedial work needed, which can involve piling and underpinning.
Subsidence claims are a particular problem in the Southeast because of the prominence of clay soil which can dry out and shrink causing subsidence. Nearby trees and vegetation can exacerbate the problem and their removal is often the way of solving the issue. Leakage from drainage and water pipes is one of the other main issues with soil literally being washed away.
Claims can often be complicated where there is historic as well as recent damage, especially if there has been a change of insurer during the intervening period. Whilst there is an Association of British Insurers protocol for such circumstances there may still be awkward questions as to whether the historic damage should have been disclosed to the new insurer.
Insuring properties that have previously suffered subsidence can be difficult but unlike years gone by when you were basically stuck with the same insurer for good, nowadays, whilst most of the mainstream insurers won’t help, specialist markets are available to cover repaired subsidence properties.
Whilst subsidence is standard cover in most home policies, commercial property owners should note that it is not automatically provided in all policies for commercial buildings and cover must be requested. As many rent and lease agreements do not require landlords to insure their properties against subsidence, tenants can face issues with their business interruption insurance if a loss occurs. That is because business interruption cover is subject to a ‘material damage proviso’ meaning cover for the damage, ie the subsidence, has to be in force for the interruption cover to operate. If there is no subsidence cover on the building the tenant will be unable to claim for business interruption. Understandably, subsidence cover on contents is often overlooked and whilst claims are unlikely there is a risk to tenants’ improvements when they are effectively part of the building.
Finally, all insurers to my knowledge exclude river and coastal erosion and many exclude structural design faults as well as damage limiting cover for the likes of swimming pools, patios, car parks etc to when the subsidence also affects a building covered by the policy.
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