Buildings Insurance with Subsidence

donsville1

Hello, I bought a house that has previously had subsidence. The Buildings insurance premium with HSBC was £800 per year when I had zero no claims bonus. I now have 3 years no claims bonus and my premium is still £800. I cant go to another insurer because they dont take on property with Subsidence, If feel that I am being taken advantage of because I cant shop around. I have called the FSA for advice and I didnt get any help. I asked HSBC to provide me with an alternative quote for a comparison as if I had zero no claims bonus to see if that premium would be higher 3 years on and they refused. Does anyone have any ideas on how I might be able to reduce my buildings insurance premium or how I can obtain justification of an £800 premium for the 4th year running? Any help would be appreciated.

mattymoo

The NCD on household insurance is much smaller than motor. With motor you can get discounts up to 65-75% for not claiming over a period of years. With household, the discount is typically 5% per annum, up to maybe 20-25% off.

Insurance rates are rising in certain areas particularly where there is little competition for the business - i.e. subsidence blighted homes. I suspect the rate rise has matched and cancelled out the increasing discount.

Homes hit by subsidence are very unattractive business to insurers and I'm afraid you are likely to be stuck with HSBC if you wish to continue the subsidence cover. This is down to an industry agreement that the firm who dealt with and paid for the original repair will continue to grant cover.

dacouch

The likely reason that the premium has not reduced is that although you have earned some no claims bonus (You typically receive a discount of between 10% and 20% for three years no claims bonus). Is that the amount you are covered for is index linked to keep in line with inflation. The inflation in rebuilding costs is generally higher than normal inflation and has been around the 5% to 8% mark per annum for the last few years (It has reduced this year due to the recession). For instance if you were covered for £100000 of rebuild costs in year one the renewal would have been index linked to circa £105000, year two renewal would then have been for circa £110250 and then renewal three would be circa £115763. (These are based on 5% index linking each year).

As Matty has mentioed, in addittion Insurance premiums are raising across the board so this may also have affected your premium in addition to the above

As you can see from the above although you probably have received some no claims discount the amount of cover you are paying for has increased.

The Insurance premiums for properties with subsidence are normally much higher than for a property without subsidence. I assume when you bought the propertythe value was discounted due to the previous subsidence as this is what happens normally. This goes someway to covereing the extra insurance costs and potential hassle if the property subsides again.

Did HSBC provide the cover to the previous owner who had the subsidence cover?

donsville1

Yes, They were the ones who paid out on the subsidence claim. Looks like I will have to put up with the £800...I was hoping it would come down slightly over time. Thank you for your response, it makes perfect sense.

dacouch

On a premium of that size it can be worth looking at the savings an increased excess will make.

For instance assuming your excess is £50 it could be worth looking at opting for a further excess of £100, £250 and £500. The way I would recommend you calculate it is multiply the saving over a ten year period. Then if the saving over ten years excedes the amount of the excess its well worth considering.

For instance you opt for a £250 excess (This will normally be on top of the standard £50 excess). The Insurers give you a discount of say 7.5% which is a saving of £60 a year so the saving over ten years is £600. (The actual saving will probably be higher as your premium is likely to increase each year). So if you do not make a claim you will save £600, if you make one claim you will still save £350. An average client will generally claim every seven or so years so this method will normally save the average customer money.

With the size of premium you have it would be best to avoid claiming for minor claims as a claim is likely to increase your premium so consider this before putting in small claims.

Do you know which Insurer HSBC have placed you with or is it actually a HSBC policy (The name of the Insurer is normally on your schedule or the policy booklet)?

donsville1

I might give that a go. My buildings excess is £75, but anything subsidence related the excess is £3000!!! the actual policy is with Aviva. Thanks

dacouch

Have a try at what I suggested as it will save you a lot of money on the size of premium you have.

Another option as you are insured with Aviva is to speak to a good local broker (Not swintons). They will deal with Aviva and might be able to transfer the policy to them and rebate part of their commission to you each year. They will receive between 20% and 25% from Aviva so you might be able to negoiate between 5% and 10% back from them. They will have very little work to do for the business (You just sign a letter giving them authority to transfer the policy) and will receive commission on what is a large amount for a home Insurance. You have to do this prior to the renewal date to take effect from renewal so give the broker a bit of notice.

Another option is Aviva often give a discount off the home Insurance premium if you Insure your car through a broker (Not direct with Aviva) with Aviva they often offer a discount off the home premium. Ask the broker or even HSBC about this as it might help although in most cases Aviva are expensive on motor insurance.

Another option to think about is that Aviva offer a fairly big discount off the building premium (And the contents premium) if you add your contents cover to the policy. So ask for a quote with the contents included and it might be a case that you make a nice saving on the contents premium that will offset some of the buildings premium.

Premier_2

donsville1 wrote: »

Hello, I bought a house that has previously had subsidence. ...

donsville1 wrote: »

Yes, They were the ones who paid out on the subsidence claim. ...

Do you mean you bought a property (cheaply) knowing it has subsidence, or has the subsidence been fully rectified with all the necessary certificates?

If the subsidence hasn't been rectified, then you are right, no one else will insure it (but that should have been explained when you bought it)

If you have all the necessary certificates that prove the property is now fully repaired and is no longer moving, you should find other insurers prepared to take on the risk ... but perhaps not using online comparison sites. It'll probably need referring to get anyone to agree.
(Edit: to clarify, it takes a number of years to prove it is no longer moving during which time you will not be able to change insurer.)

Premier_2

donsville1 wrote: »

...anything subsidence related the excess is £3000!!! ...

That's probably quite good given the history. £1000 excess is very typical for susbidence, even with no historical problems.

When I was shopping around last year, one insurer decided they wanted £10k excess ... and that's with no subsidence history on a 40 year old property!
It wasn't a printing error, they confirmed it when I called them to double check. When they realised they were not going to get the business, they quickly reduced it back to the £1k norm for no extra premium. :rolleyes:

donsville1

Sorry forgot to answer this...Subsidence has been fully rectified...the problem was large trees to close to the house, which were removed at the time of the underpinning work. We have all the certificates or work.

Premier_2

Here are some companies that might be able to provide you with alternative quotes for an underpinned property.

http://www.asuc.org.uk/InsuranceList.PDF