Help - subsidence worry. Am i not covered by my buildings insurance?

twiglets_2

Hi, I'm new to this and I'm looking for some advice!!

I've been living in my victorian 2 bed mid-terrace for 4years. When we bought the house we had a homebuyers survey which revealed that there had been some movement casued by damage to the drains. The sellers provided copies of the works they had undertaken to fix the drains and the surveyor said that it appeared that it had resolved the problem and there had been no further movement since.

We originally had insurance with the lender and then two years ago transferred to another provider. We never declared that there had been 'subsidence' (on either insurance) because I wasn't aware that this small amount of movement identified on our survey was classed as such and there was never anything in my survey that said i needed to do so (probably me being naive!).

We are now trying to sell our house and our buyers surveyor was concerned that there had been movement and said technically this is classed as a form of subsidence. He also said that if we haven't declared this to our insurer then we probably aren't covered!

I now don't know what to do - my buyers have pulled out of the purchase and I'm left wondering whether I have valid insurance!

Should I inform my insurance company straight away and risk them withdrawing our insurance completely? Should I start getting quotes from other insurers to see if i can find one that will cover me with this history of subsidence? or should i instruct a structural engineer first to check out exactly how bad it all is?

I'm in a bit of a panic - any advice would be gratefully received.

FIVEINAROW

Sorry Twiglet, Im not an expert, but Ive watched a friend go through a similar thing not that long ago , and I think youre between a rock and a hard place. Insurance firms you deal directly with, are always underwritten , and these underwriting firms carry historical info on properties which have had particular problems . Hence if ever a major claim is made in the future, for ANYTHING , they refer to this as part of their endeavours not to pay out.

YOU didnt have a problem buying this property because it was still being insured presumably at that stage by the ins company who paid out for the drain job and the paperwork was probably showing an increased excess (2-3k+)typical of previous claims ie your solicitor and or mortgage co. could see and hopefully checked that that meant the insurance firm was aware of the subsidence history and therefore valid.
Mortgage crunch now means that mortgage companies want low low risk clients , so theyre going to be checking out more thoroughly what theyre lending on .
Because you havent declared for whatever reason, any subsidence claim made by you would be turned down , and it would be down to good will of the company whether they even accepted a fire/theft claim

If any buyers were to go ahead with this invalid policy in place,and down the line needed to claim, they could then sue their solicitor for not pointing out the danger to them . Hence its unlikely any solicitor will allow a sale to go through before this insurance is sorted.

Re changing insurance companies at this stage. Thats almost impossible. As soon as you mention the previous history , which of course you now have found out you need to to have valid insurance on which to base a sale, all regular companies will likely turn you down and tell you to go back to your present company and get it sorted. No-one chooses to take on a risk.
Im not an expert , so only take what I say as ideas to research, but I suspect now that you have two choices.
You go back to your present firm and explain what happened - declare the previous history , and see if they will still cover you . Its likely they will ask for a full structural survey first. (Dont get your own SEngineer yet incase your ins firm wants to use their pet one and dont trust yours) Sadly I must warn you that this MIGHT take time especially if the SE wants monitoring in place before theyll put their name to a document on which their reputation sits.
If you approach your present firm with the truth and they turn you down flat- then you'll have to go to a specialist firm . Google subsidence insurance.
That too will take time.
Good luck, its a rotten pickle to be in . I hope you can get sorted quickly .

FIVEINAROW

I should have added at the beginning, that the underwriting firms hold information which is shared with other firms for mutual benefit.

FIVEINAROW

And of course you should be straight with your own solicitor and ask his advice on how to proceed.

Martin_T_3

Was an insurances claim made on the previous work on the drains? If not then the insurers would not necessarily be aware that there is a subsidence risk.

When you took out the insurance policy you were probably asked if you were aware of any history of subsidence. As you pointed out you were not aware of any history of subsidence at the time you took out the policy. You are not an expert in subsidence and therefor unless it was explicitly mentioned in the homebuyers report you can not be expected to know if the property has a history of subsidence.

You have now been made aware that there could be a history of subsidence. You have a duty to inform the insurers of this. However the survey was not carried out by yourself and for all you know could be a ploy by the buyers to negotiate on price. Therefore whether you need to pass on this second hand information on to the insurers is debatable.

JF77

Yes, tell them as non disclosure could invalidate any claim or, indeed the policy itself. They may just impose an increased excess in the event of any future claim. A subsidence excess would normally be about £1,000. Also, you should send them a copy of the report you have which states work done and surveyors opinion.

I would try and resolve with your existing insurer as finding a new one could prove more problematic. A new buyer could also approach the same insurer for a policy in their own name as they are already covering the property.

Does not sound like a big problem but, you do have a duty to declare information which may affect the policy.

silvercar

Tell your current insurere that you are selling your house and that your solicitor is trying to make sure the path is smooth. For this reason you want to pass to them the homebuyers survey you had done 4 years ago in the interest of complete disclosure. Ask for confirmation that you are covered.

No need to mention the buyers survey, you didn't commission it. Your buyers could easily be using this as an excuse to pull out given the state of the market. In any case it sounds like their survey is commenting on the old movement not anything new.

FIVEINAROW

Quoted from MartinT
"When you took out the insurance policy you were probably asked if you were aware of any history of subsidence. As you pointed out you were not aware of any history of subsidence at the time you took out the policy."

But sadly he DID know Martin because it was on his homebuyers report when he bought the house.

Martin_T_3

The home buyers report mentioned some historic movement. The original poster is not in the position to judge the severity of that movement. If the surveyor was concerned he should have asked the orinal poster to get a structural engineers report or take further action. The poster is not an expert in the field and therefore can not be expected to know that past historic movement refers to subsidence. There is often movement in buildings due to settlement this is not necessarily classed as subsidence.

Premier_2

Tell your insurance company now - what have you got to lose?

You don't seem to have any proof the building is not moving, only an assumption from a surveyor that it seems not to be - who paid for this survey? The builder who did the work by any coincidence?

The insurer will advise on what you need to do to satisfy them the house is currently stable. Until you get that proof, it's unlikely you'll get any other insurer or even buyer (unless they are strictly a cash buyer willing to take a chance by buying the property off you for a fraction of what it would otherwise be worth) as the subsidence will come up each time the property is surveyed for any mortgage company

Martin_T_3

Once you tell the insurance company the property will always have a history of subsidence. I am not saying you shouldn't tell them only that it is worth seriously considering before doing it.