Insurance company wont insure me because of woodworm

vertex

Hi. I was buying a house but it turned out that the lintel above the door is rotten/woodworm and the bottoms of the posts in the wall are rotten. I got a builder to take a look at it and he didnt think it was a big issue - maybe a few grand. However, the insurance broker says that if I dont tell the insurance company about this, then should I make a claim in the future, the insurance will be void becasue I didnt tell them about this.

I have nothing to lose by telling the insurance company (no insurance = no mortgage). I suspect they'll want a full survey to be done, then they'll massively increase my premiums until the work is done. Is this right? Or maybe they wont insure me until all work is done. Or maybe they'll be OK with it (which I doubt!)

Someone mentioned that I should go to Alliance & Leisecter (who have offered me the mortgage) and get insurance with them. The reasoning behind this is becasue they sent out someone to do a home buyers report and were happy to lend on the basis of their findings, so they should be happy to insure me.

Has anyone else been through a similar nightmare scenario or have any suggestions or advice? thanks.

huckster

You should get the seller to sort of the works necessary at their cost, before you complete on the purchase.

The wordworm damage would not be covered by Home Insurance and Insurers could say that they won't provide full cover, until such faults have been rectified. You are asked the question about whether the house is in a good state of repair.

If the mortgage company know about it, they might not release the full mortgage, i.e the might apply a rentention. Hence the reason to get the seller to sort out the problem.

I have had extensive previous dealings with this type of situation and my advice is to get the seller to sort it out. But make sure you see the builders specifications for the work to be completed and confirmation from the same builder that they have carried out the work.

The seller might try to negotiate with you and reduce the sale price to reflect the works. You then still have the problem of a possible mortgage retention and not having full Insurance cover. The only benefit from contracting the works with a builder yourself, is that if there is a problem with the work, you have a legal way open to you. The builder doing the work can however get the works Insured and this cover can be passed onto you, to get around this particular issue.

vertex

Ive just got off the phone from Santander. I was open and honest and said that there was a problem with woodworm and some rotten supporting posts in the wall. The chap said that no questions would be asked in regards to these - only questions about security, subsidence etc...

I explained that I didnt want to 'slip anything beneath the radar' because I do want to have the peace of mind that Im fully insured. The house is in a good state of repair - its just the woodworm and rotten posts which are the concerns. Ive had 2 builders look at it and both said they were not big things to rectify. The chap and Santander certainly didnt think it would be an issue or hamper getting insurance from them (yes, Im aware its probably in his interest to say that).

These issues would be the first things Ild rectify if I move in. Ive been looking at different types of property insurance I think I would need. http://www.versatileinsurance.co.uk/jct-insurance.php and http://www.versatileinsurance.co.uk/property-insurance.php for example. The vendor's have said that they can't come down anymore (which I actually believe) and I think they'll just stay there if I cant buy it. Theyre probably going to have the same problem with the next buyer that comes along. The vendors are a very old couple and dont really understand how the modern world works and dont have the energy to get builders in, sort out specialised insurance etc.. The situation is a complete mess.

huckster

Fine, if the rest of the house is in a good state of repair, then just arrange the best policy you can, with a decent Insurer. The Santander policy is administered by BISL (Budget Insurance). Not the best supplier of Insurance if you want a stress free relationship. If you research them online for comments, you will see what I mean.

What the guy from BISL meant was that they don't ask the question about the state of the house, but it is a condition of the policy.

If you have already negotiated the price down and this accounts for the woodworm issue, then it is up to you how you deal with this. It does not sound like a major job anyway. I am not sure about the links you have added e.g. JCT. The contractor doing the work should have their own Insurance to cover the works they are doing. What additional Insurance do you think you might need, extra to normal Home Insurance ?

I don't know what the age/size/type of the house is or what the sums Insured are that you are looking at. With wooden lintels it sounds like an older style house and therefore you might be best to take out a policy through a company that will be more aware of issues that affect an older house.

e.g.

NFU Mutual
Hiscox

vertex

The property looks in very sound condition, although I havnt had a Home Buyers or Structural Report done (just a Mortgage Valuation). Its just the wooden lintel over the front door and the party wall (which is structural). The only reason that the wall was found to be an issue is becasue the next door neighbour removed the skirting board and could see the footings had rotten. She subsequently got a surveyor in who said that the bad wood would need replacing with good wood and damp coursing would need to be put in. Becasue this is a party wall we would probably share the costs.

I just tried getting a quote from BISL online and was refused. NFU dont offer quoting on their site so Ill have to phone them. Hiscox did quote me although its more than what my current insurance company has quoted (and was suggest they wouldnt insure me unless I got a survey done).

huckster

I think you are taking a very big risk, buying a property without obtaining a full survey. The mortgage valuation reports are just a general check on a property.

It is up to you, but given the signals about Insurance companies not quoting for the house, you might want to consider a full survey/Structual Engineers report. Speak to a local surveyors office about the house and see what they recommend.

When I mentioned BISL, I meant they are the people that provide the Insurance administation for Santander. When you think you are talking to Santander, you are actually speaking to someone who works for BISL. As BISL don't have a good reputation, I would not touch them personally.

I really recommend that you obtain a full survey and once you have that, depending on findings, approach a decent company, that is suited to the risk.

bouncydog1

For your own peace of mind you should get a survey - that way if anything turns up that wasn't mentioned on the report you should have recourse to the surveyor (subject to the warranties provided in the report).

Speaking from experience as my grandparents purchased a house - relied on a builder to give them advice, and over the next few years had nothing but problems with rot which obviously wasn't covered by their house insurance. The builder had helped them out so nothing was in writing. Cost them a huge amount as they had to constantly pay for repairs to be done.

huckster

I have recommended many people to obtain full surveys and where necessary drain inspections. Some have come back to me later, to tell me of major issues they have found, which had they not had these surveys, would have cost them thousands.

Far too many people rely on mortgage valuation reports without realising how basic these are. Most of these are about a 10 minute rushed visual inspection and it is often difficult to have any come back on the surveyor.

vaio

I’m struggling to see what the problem is. I’d have said that wood worm is a gradually acting maintenance issue so wouldn’t be covered under insurance so why would the insurance company be interested let alone void the cover? They would never pay for insect damage but other claims should be paid as normal

We’ve just discovered some top floor ceiling joists that are affected by wood worm and will probably need replacing, are people suggesting that our insurance cover is somehow at risk should we have flood or theft?

The matter of the full structural survey vs. Home buyers is just a matter of how risk averse the OP is, but as the party wall issue was discovered by the neighbour removing skirting boards it’s most unlikely any survey would have discovered it as surveyors don’t lift carpets let alone remove skirting boards particularly next door’s skirtings.

huckster

Vaio

I know where you are coming from. I had those thoughts myself.

But I don't know the age of the property, construction type etc. It could be that they have put in the age of the property at a level, which Insurers will not quote online for.

For all I know it could be an old semi detached cottage, with construction type that needs special consideration. Hence why I said that should ask a surveyor about this, with a view to getting a full survey. But as you say, this is their choice.

I am not trying to worry them, but given the information in their last post, I would obtain another survey. Perhaps they should ask the person who did the mortgage valuation report, whether they would suggest getting another survey.

vaio

Yep, it could be some sort of medieval post and beam construction that does have seriously structural bits of wood in party walls that would need a specialist surveyor

However, my money is on standard Victorian/Edwardian or later construction (which often had random bits of wood in walls for fixing skirting, dado, gas pipes etc to) coupled with a spotty face youth in the insurance brokers whose standard answer to anything even slightly out of the ordinary is “your insurance could be void, better spend some more money…”

The FOS (which only exists because of insurance industry taking the mick) is very clear, insurance companies have to ask clear and unambiguous questions about anything they consider to be a material fact and, even if they have a warranty term in the policy about maintaining the house in good order then any breech of that warranty will only affect a claim if the breech caused or contributed to the claim