This section of the website describes how we approach complaints involving buildings insurance disputes about subsidence.
Subsidence is the downward movement of the site on which a building stands -where the soil beneath the building's foundations is unstable. The movement is not caused by the weight of the building.
Most household insurance policies - and some commercial property insurance policies - cover loss or damage caused by subsidence, heave and landslip. However, they only cover the cost of repairing the loss or damage. They do not cover the cost of preventing further subsidence.
This means the cost of repairing damage (such as cracks) to the building's superstructure is covered. But the cost of stopping the building from moving in the future is not covered.
In reality, to ensure an effective repair that will last for a reasonable period of time, the insurer will usually have to carry out work to stop the movement first (unless it has already stopped).
Subsidence cases are often complex - and involve expert evidence and technical data .They are among the complaints that can take the longest time to resolve.
In December 2011, The Financial Services Authority (FSA) published the following definitions of heave, landslip, settlement and subsidence, as set out in an undertaking from Legal & General Insurance Limited.
Upward movement of the ground beneath the buildings as a result of the soil expanding.
Downward movement of sloping ground.
Downward movement as a result of the soil being compressed by the weight of the buildings within ten years of construction.
Downward movement of the ground beneath the buildings other than by settlement.
“The site” is not usually defined in insurance policies. However, the Annual Report published by the Insurance Ombudsman in 1984 states:
“The Site is the prepared ground, including made-up ground, on which the building is erected after the foundation trenches have been dug and immediately prior to the first step in the actual process of building”
We will usually support insurers’ own definitions so long as they are in line with these, clear and unambiguous.
Subsidence cases that consumers refer to us can involve:
Subsidence is usually caused by one or more of the following situations.
This is one of the most common causes of subsidence. Clay is made up of about 30% to 35% water. This means that soil with a high clay content can become “desiccated” (dried out) as a result of nearby vegetation sapping the water - particularly during long hot summers.
When this happens, the volume of the soil decreases and the building's foundations subside.
If a tree is responsible for causing structural problems to a property because of shrinkage of clay subsoil beneath the foundations, several different remedies are available. These include:
Another alternative is to install root barriers, which aim to halt the encroachment of the roots to protect the vulnerable property. Most experts do not consider this to be an effective or economic option - but we will look at the individual circumstances of each case.
The insurer will usually instruct an arboriculturalist to advise on the most appropriate measure(s). However, it is increasingly thought that measures (like pruning) to manage trees - rather than remove them - are not always effective in the long term. This means further action and repairs may become necessary.
Very occasionally, over-enthusiastic tree management can actually have the opposite effect to the one that was intended - if the soil becomes over-saturated with moisture and the ground swells up, causing heave.
If a case involves a third party - for example, a next-door neighbour - who refuses to allow their trees to be reduced or removed, an insurer can take legal action. But we would expect the insurer to have considered the impact this could have on the relationship between the consumer and the third party - and to have discussed the situation with the consumer before proceeding.
Without taking legal action, an insurer cannot force a third party to reduce or remove their trees. However, if the insurer was not prepared to fund legal action, we would expect it to have identified another way to stop the movement so that it could repair the subsidence damage.
Because it is in the interests of both parties that the movement is stopped and repairs completed, in most situations we would expect the consumer to cooperate with the insurer’s attempts to do this.
If an insurer proposes to take legal action but the consumer refuses permission, we would consider the reasons behind the consumer’s decision. But we are unlikely to ask the insurer to find an alternative way to stop the movement if it involved additional expense.
The Association of British Insurers (ABI) published its Domestic Subsidence Tree Root Claims Agreement in 1997. Signatories to this agreement should not pursue recovery actions in the courts against the domestic owners of trees and/or their insurers for subsidence (or heave) caused by encroaching roots - unless the owner was aware of the problem and did not take reasonable preventative measures.
This agreement does not apply to legal actions against local authorities or non-domestic landowners.
A significant or long-term escape of water - possibly from burst or leaking pipes - can wash away the fine particles of the underlying soil. When this happens, the volume of soil beneath the property reduces and the property foundations subside. Alternatively, the escape of water can cause the underlying soil to soften, meaning it has a reduced ability to support the weight of the property - again causing the property’s foundations to subside.
If subsidence is caused by an escape of water, it is usual for the consumer’s claim for loss or damage to be considered under the “escape of water” peril of their insurance policy at first. This usually has the advantage for the consumer of involving a lower policy excess.
However, it is not unusual for there to be a specific exclusion for subsidence damage under this peril - meaning that the claim would be considered under the “subsidence” peril, which usually involves a higher excess.
A “solution feature” is an erosion of the underlying soil that results in an underground cavern. This eventually gives way and may cause subsidence to the site above or nearby.
A solution feature can occur in limestone or chalk and is often triggered by an escape of water or a rise in the water table. The first sign is usually a small hole appearing at surface level.
Buildings sometimes subside as a result of the collapse of underground mines. This often involves mines that have long been disused.
Although this is a valid “insured event”, there may be a third party who can be held liable for the damage - for example, the National Coal Board (or its successor). So although an insurer should still deal with a consumer’s claim, it may be able to recover what it pays out under the consumer’s insurance policy by bringing a claim against the third party.
In some situations, it is reasonable for the loss or damage to be dealt with by the third party itself - with the insurer’s cooperation. This does not end the insurer’s liability for the claim, but can be the most practical way of moving the matter forward.
Every property will “settle” by a small amount for a short time after it is built. This is caused by the weight of the building compacting the soil that its foundations rest on.
However, soil ”compaction” can be significantly greater than would usually be expected because of:
Any of these may result in considerable downward movement of the property or floor slabs and damage to the superstructure.
We often see cases where floor slabs have subsided from similar issues relating to the fill used beneath the slab. This fill is not considered part of ”the site” and most policies exclude subsidence of floor slabs where there is no movement of the foundations as well.
As organic fill decomposes, it loses volume and resilience. This causes the downward movement/compaction of the site and the structure to move downward.
Every property - and especially those constructed by traditional methods - will suffer from cracking to the superstructure at some point. Cracking in itself is not evidence of subsidence. It can be caused by a number of other things - which are often uninsured. These include:
Settlement is usually the downward movement of the site on which a building stands caused by the weight of the building. Occasionally it can also be ”self-weight” - where the weight of material used to make-up the site compacts the soil beneath it. (see FSA definition above).
Most new buildings will settle during the first few years after they are built. This sometimes gives rise to superstructure cracking - and concern about subsidence. But so long as the building moves uniformly, there may be no structural problems or serious damage.
The hallmark of subsidence is differential movement - in other words, different parts of the building moving at different rates. This will often not be present in cases of settlement - although buildings do sometimes settle in this way and new additions to an existing building will often settle differently to the original building.
If an insurance policy does not specifically exclude settlement (and “consolidation” and ”compaction”), we may decide a claim should not be rejected just because the movement is connected to the weight of the buildings.
This is the expansion and contraction that occurs when there are changes in temperature. It can occur as often as daily or on a seasonal basis - or while new buildings dry out.
For example, masonry heats up and expands during the summer and cools and contracts during the winter. This can cause cracking - which, although unsightly, is not structurally dangerous. It is not subsidence of the site.
Masonry is particularly susceptible to thermal movement, as well as areas where two different materials meet - for example, wood and plaster. The problem can be particularly acute where no allowance has been built into the structure to take account of the movement.
Lintel failure is characterised by diagonal cracks above windows and doors - and can usually be diagnosed from the pattern and position of the cracks. It happens where a lintel - a solid support for the brickwork above the opening normally made from steel or concrete - is either missing or inadequate.
Lintel failure is caused by poor design and/or workmanship - or by a failure of the material the lintel is made from. This means that the cause of the damage is not subsidence. In fact, many insurance policies expressly exclude lintel failure. But because the cracks look similar to those caused by subsidence, lintel failure can sometimes be mistaken for it.
Sulphate damage occurs as a result of a chemical reaction - usually triggered by water - between cement paste in a concrete floor slab and sulphates in the filling under the slab.
The symptoms are similar to those caused by ”heave” (where the ground moves upwards). This means that sulphate damage is sometimes mistaken for heave.
Policies do not usually cover damage caused by a sulphate reaction unless it is triggered by some other insured event - for example, escape of water from water tanks or pipes.
Subsidence damage to buildings is sometimes attributed to faulty design and poor workmanship - neither of which are insured. Examples include situations where:
Many insurance policies will not cover subsidence damage to parts of a property defined as “buildings” - for example, patios, paths and terraces - unless the “main residence” is also affected by the subsidence. Policies differ in how they define the ”main residence” or the ”buildings”. Some policies include outbuildings and garages as part of the ”home” - but others do not.
We often see complaints about this restriction on insurance cover. But we do not view it as an unusual or onerous restriction. So as long as it is clear and unambiguous, we would not expect an insurer to have specifically drawn a consumer’s attention to it.
When considering a complaint, we would look at the wording and definitions in the policy documentation to see which parts of the building are covered - and which parts are only covered if there is also damage to the main buildings.
Many of the subsidence complaints we see involve issues about communication between the insurer - and/or its loss adjusters - and the consumer.
We think insurers should make consumers aware at the outset that subsidence claims are usually complex - and may involve lengthy and inconvenient investigations and repairs. We also think it is good practice for insurers to keep consumers up to date on the progress of their claims and make sure they are consulted where appropriate.
Where the loss or damage may have been caused by subsidence, we usually expect insurers to have carried out a thorough investigation into the cause as part of considering the claim. Monitoring over a relatively short period can give useful results: twelve months is reasonable because all the seasons are covered, and it is unlikely any longer than this will be useful.
A thorough investigation would usually involve one or more of the following:
If we find an insurer has done none of these, we may ask them to reinvestigate the claim.
The Water Industry (Schemes for Adoption of Private Sewers) Regulations 2011 came into force on 1 October 2011. Under the regulations, sewerage and water companies are responsible for any private sewers or lateral drains that extend beyond the property boundary or drain to a public sewer.
This means permission will be needed from the sewerage or water company before accessing or repairing the drain - which could create problems when an insurer tries to inspect or carry out work on a site.
Underpinning is generally seen as the most permanent - and most effective - way of stabilising. But it is often unnecessary - and can sometimes be detrimental to the remainder of the structure.
In many cases, a building can be stabilised by other action - for example, by repairing leaking drains, removing vegetation, removing other external causes or providing additional strengthening.
In situations where underpinning is required, it can be done by:
When we look at a case, we will compare any expert opinions that have been provided with the actions taken (or recommended) by the insurer - to see if the insurer has acted reasonably. If there is conflicting expert evidence about the appropriate remedy, we will decide which is the most persuasive. Very occasionally, we may ask for further independent evidence.
Once the property has been stabilised, repairs to the superstructure can be carried out. Cracks can be filled and redecoration can begin. The masonry might have to be strengthened.
Consumers sometimes complain that the cosmetic repairs carried out to their property are inadequate. These types of dispute are not really about subsidence - so we will treat them in the same way as other disputes about repairs under insurance policies.
Occasionally, the cost of stabilising the structure and repairing the superstructure is likely to exceed - or almost exceed - the amount it is insured for (which should cover the cost of demolishing and rebuilding it). In these cases, the property is “written off”.
If the property is beyond economic repair, the insurer may offer the consumer a cash settlement representing the reduction in the property’s value. This amount will be the sale value immediately before the damage less the residual value after the damage. We expect these values to be calculated using expert evidence - for example, from surveyors or reputable estate agents with knowledge of the local property market.
We sometimes see complaints where the consumer is requesting an additional payment after the subsidence damage has been repaired and the property fully reinstated - because they feel the property has decreased in value as a result of the damage.
Most policies expressly exclude this. We usually say that if the property was stabilised and the superstructure properly repaired, there should be no reduction in value.
Sometimes the amount a property is insured for does not cover the cost of stabilising the site and repairing the damage to the buildings. We see complaints where once the policy’s maximum amount has been reached, the insurer tries to stop payments relating to the claim - even though the necessary stabilisation and/or repair work is not complete.
But when an insurer chooses to repair damage under an insurance policy, it enters into a ”contract to repair” - which is separate to the contract of insurance. In most cases, this means that the insurer is not able to limit the benefits under the contract to the amount the property is insured for.
So we are likely to tell the insurer to continue to meet any costs of stabilisation and repairs beyond that amount.
We see cases where the consumer has changed their buildings insurer and then made a claim for subsidence. The new insurer says that the damage caused by the subsidence pre-dates its policy and so should be covered by the previous insurer - but the previous insurer does not agree.
The ABI published its Domestic Subsidence Agreement to deal with these situations. Insurers subscribing to the agreement should handle “change of insurer claims” as follows:
The guidelines to the ABI’s agreement say that “the only practical solution is for the Agreement to be driven by the date of notification”. This means it is irrelevant whether the bulk of the damage occurred before the current policy started.
If the consumer was aware of subsidence when they took out the new policy and did not disclose it, the current insurer may still be able to “avoid” the policy - in other words, treat it as if it never existed - on grounds of material non-disclosure.
But being aware of cracking is not necessarily the same as being aware of subsidence - and most consumers do not have expert knowledge of these things. So establishing exactly what the consumer knew when they took out the policy is extremely important.
The Domestic Subsidence Agreement does not apply where a property has changed hands - and there has been a change of policyholder.
Most policies specify that they only cover damage that occurs within the insured period.
The Insurance Ombudsman Bureau (a predecessor to the Financial Ombudsman Service) decided that insurers are only obliged to repair damage that occurs after the start of the policy - unless that damage cannot be properly repaired without repairing some or all of the previous damage.
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.