Subsidence and other types of ground movement

Ground movement can impact the site on which a building stands, beneath its foundations. Heave, landslip, settlement and subsidence can cause damage to a property and upset to its owners or occupants.

Policies often refer to the ‘the site’ when talking about ground movement cover. This usually means the prepared ground, including made-up ground, on which a building is erected after the foundation trenches have been dug, and immediately prior to the first step in the actual process of building.

Types of complaint we see

Ground movement cases that customers refer to us can involve:

• an insurer rejecting a claim for subsidence damage because the damage wasn’t caused by subsidence but by an uninsured event, such as settlement
• claims taking a long time to resolve
• insurers not communicating with the customer
• an insurer not providing adequate alternative accommodation while repairs are being made
• an insurer proposing a claim settlement that the customer feels isn’t enough, for example when the customer wants the entire property underpinned but the insurer says that less extensive remedial measures will do
• repairs completed by an insurer that the customer says are poor
• repairs completed by an insurer that have caused further damage
• an insurer being unwilling to provide continued cover following a subsidence claim

What we look at

One of the first things we must look at is the probable cause of ground movement that has caused damage to a property.

There are four main causes, as defined by the Financial Conduct Authority (FCA): heave, landslip, settlement and subsidence.

Definitions of ground movement types:

Heave
Upward movement of the ground beneath a building as a result of the soil expanding.

Landslip 
Downward movement of sloping ground.

Settlement (also known as consolidation or compaction)
Downward movement as a result of soil being compressed by the weight of a building within 10 years of construction.

Subsidence
The ground beneath a building sinks, pulling the property’s foundations down with it. It usually occurs when the ground loses moisture and shrinks, which can be caused by prolonged dry spells. It may also be caused by trees and shrubs which can absorb significant volumes of water from the soil. 

You can find more information about how we look at subsidence cases below. 

Removing trees to prevent or halt subsidence

If a case involves a third party, for example a next-door neighbour, who refuses to allow their trees to be reduced or removed, you can take legal action. But we’d expect you to:

• consider the impact this could have on the relationship between the customer and the third party
• discuss the situation with the customer before proceeding

Without taking legal action, you can’t force a third party to reduce or remove their trees. However, if you weren’t prepared to fund legal action, we’d expect you to have identified another way to stop the movement so that you could repair the subsidence damage.

Because it’s in the interests of both parties that the movement is stopped and repairs completed, we’d expect the customer to cooperate with your attempts to do this.

If you propose to take legal action but the customer refuses permission, we’d consider the reasons behind the customer’s decision. But we’re unlikely to ask you to find an alternative way to stop the movement if it involved additional expense.

Problems that can be confused with ground movement

There are a number of problems with properties that look like they could be caused by ground movement, but in are fact caused by other factors, for example:

Subsidence damage to other parts of the property

Many insurance policies won’t cover subsidence damage to parts of a property defined as buildings unless the main residence is also affected, for example:

• patios
• paths
• terraces

Policies differ in how they define the main residence or the buildings. Some include outbuildings and garages as part of the home, others don’t. We often see complaints about this but we don’t view it as an unusual or onerous restriction.

As long as the policy is clear and unambiguous, we don’t expect you to have drawn a customer’s attention to it.

When considering a complaint, we’d look at the wording and definitions in the policy documentation to see what exactly is covered.

A change of insurer

We see cases where the customer has changed their buildings insurer and then made a claim for subsidence.

The new insurer says that the damage caused by the subsidence predates its policy and it should therefore be covered by the previous insurer, but the previous insurer doesn’t agree.

Read a case study about a change of insurer.

To deal with these situations, the Association of British Insurers (ABI) published its Domestic Subsidence Agreement. If you subscribe to this agreement, this is how you’ll need to handle change of insurer claims:

• If the claim is made eight weeks or less from the start date of the current policy, the previous insurer deals with the claim.
• If the claim is made one year or more from the start date of the current policy, the current insurer accepts the claim.
• If the claim is notified more than eight weeks but less than one year from the start date of the current policy, the claim is accepted and dealt with by the insurer who was first notified about the claim and the cost of the settlement will be shared between both insurers.
  It’s irrelevant whether most of the damage occurred before the current policy started.

If the customer was aware of subsidence when they took out the new policy but didn’t disclose it, the current insurer may still be able to void the policy on grounds of material non-disclosure. 

But being aware of cracking is not necessarily the same as being aware of subsidence – most customers don’t have this level of expertise. So it’s very important to find out exactly what the customer knew when they took out the policy.

The Domestic Subsidence Agreement doesn’t apply when a property has changed hands and there’s been a change of policyholder.

Handling a complaint like this

You should make customers aware from the start that subsidence claims are usually complex and may involve lengthy and inconvenient investigations and repairs.

Many of the complaints we see are about poor communication with customers, so it’s good practice to keep them updated on the progress of their claims and consult them where appropriate.

You’ll usually need to carry out a thorough investigation into the cause of loss or damage caused by subsidence. Monitoring over 12 months is sometimes reasonable because all the seasons are covered.

A thorough investigation would usually involve:

• making shallow trial holes to determine how deep the foundations are, what they rest on and whether nearby drains are leaking
• hand-augered boreholes to determine the nature of the ground at depth and obtain samples for analysis
• CCTV inspection of drains close to the property
• crack monitoring to see whether the building is still moving, the extent of the movement, and whether it’s seasonal which may point to tree root desiccation

If you haven’t done any of these, we may ask you to reinvestigate the claim.

Putting things right

Most household insurance policies, and some commercial property insurance policies, cover loss or damage caused by subsidence, heave and landslip. They usually cover the cost of repairing the loss or damage and not the cost of preventing further subsidence.

This means the cost of repairing damage to the building's superstructure is covered. But the cost of stopping the building from moving in the future isn’t.

If the building is still moving, you’ll usually need to carry out work to stop the movement first to make sure that repairs are effective and will last for a reasonable period of time.

There are several ways to settle a complaint when arranging to repair the damage caused to a property by ground movement, depending on what the problem was.

Some ways to put ground movement claim complaints right include:

• finding a fair cash outcome
• underpinning and other repairs
• making an effective and lasting repair
• when to repair and when to replace?
• finding a good match
• stabilising the building
• superstructure repairs

Subsidence needs to be stopped before the property is damaged further.

As an insurer, you’ll need to identify the cause of the subsidence and stop its effect on the property by removing or pollarding vegetation, or repairing leaking drains, for example.

Most buildings insurance policies only cover the cost of repairing the damage caused by subsidence, not proactively preventing any future subsidence. What’s important is that you make the property stable.

If a customer complains that any cosmetic repairs are inadequate, we’ll treat them in the same way as other disputes about repairs under insurance policies.

We’ll compare expert opinions you’ve been provided with, with the actions you’ve taken or recommended to see if you’ve acted reasonably. If there’s conflicting expert evidence about the appropriate remedy, we’ll decide which is the most persuasive. Occasionally, we’ll ask for further independent evidence.

Stabilising the building

So that repairs are effective, you’ll need to make sure that the property is stable. You’ll usually pay for any works needed straightaway to stabilise the property to solve the immediate problem not to prevent future subsidence.

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.

Underpinning

Underpinning is often seen as a permanent and effective way of stabilising but is only used in the most serious cases. Also, it would usually be considered preventative, which isn’t covered under the insurance policy.

In many cases, a building can be stabilised by other action, for example, by:

• repairing leaking drains
• removing vegetation
• removing other external causes
• providing additional strengthening

If you use a method other than underpinning, we’ll consider whether that method is adequate to stop the movement based on expert evidence.

Compensation when a property’s value decreases

Sometimes the cost of repairs is greater, or almost greater, than the amount the customer has insured the building or contents for.

If the property is beyond economic repair, the insurer may offer the customer a cash settlement representing the reduction in the property’s value. This is worked out based on the sale value immediately before the damage, less the residual value after the damage.

The value must be calculated using expert evidence, for example, from surveyors or reputable estate agents.

Sometimes, customers feel the property has decreased in value as a result of the subsidence damage, even after it has been repaired and the property fully reinstated. In these cases, the customer may request an additional payment.

However, most policies exclude this. We usually say that if the property was stabilised and the superstructure properly repaired, there shouldn’t be a reduction in value.

In other cases, the amount a property is insured for doesn’t cover the cost of stabilising the site and repairing the damage. We see complaints where the insurer tries to stop payments relating to the claim once the policy’s maximum amount has been reached, even though the work isn’t finished.

But when an insurer chooses to repair damage under an insurance policy, it enters into a ‘contract to repair’, separate to the contract of insurance. In most cases, this means that the insurer isn’t able to limit the benefits to the amount the property is insured for.

So we’re likely to tell the insurer to continue to meet any costs of stabilisation and repairs beyond that amount.