Buildings insurance for property with minor subsidence history

subsidence-newbie

Hi. I asked a question in the House Buying, Renting & Selling forum, but someone pointed out that the Insurance & Life Assurance forum might be a better place. So apologies for the duplicate post...

We're in the process of buying a house. Just before they accepted our offer, the vendors revealed that the previous owner had made a claim for subsidence on the property in the late 1990s. They said that they'd had no problem insuring the property and on this basis we agreed to continue with the purchase.

Fairly soon after that they supplied us with the details of their insurance policy which did indeed cover them for subsidence with an excess of £1000 and a premium that didn't sound excessive.

What we had not realised was that when they purchased the property, they did not take over the original policy against which the claim was made (which in hindsight seems rather foolish). As we understand it, if they had taken over the original policy, the insurer would have had an obligation to continue to provide them with insurance cover. But given they did not do this, presumably it's possible that it may become difficult to insure the property?

They've also supplied us with fairly extensive documentation of the subsidence claim. It looks as if the movement was fairly minor and the claim was resolved with the removal of a neighbours tree and the repair of a drain. The cracks were monitored over a period of some months and then the insurer agreed that the movement had stabilised and paid for the affected internal areas to be redecorated. As far as we can tell no underpinning was deemed necessary, although the documentation is not exhaustive and does not include a Certificate of Structural Adequacy.

We have had a full buildings survey done and told the surveyor about the prior subsidence claim. The surveyor saw no evidence of any current or recent movement. Here are the relevant paragraphs :-

> The main external walls appear to be of solid construction between approx 240 mm total thickness. They are considered to be in a satisfactory structural condition as they generally appear relatively plumb, straight and level but there are a number of filled cracks visible. Bearing in mind a past insurance claim for subsidence the movement must have been relatively slight as there is little evidence to see of any past movement.

> Confirmation should be obtained that the insurance claim regarding past subsidence has been signed off and all repairs carried out.

> The property is considered to be in satisfactory structural condition but as previously mentioned there is some cracking which has been filled to the front bay. This appears to be only minor but we believe relates to the previous insurance claim regarding subsidence caused by clay subsoils and the effect of nearby tree and leaking drain. We saw no evidence of any current or recent movement in these areas and would expect no further significant movement to occur. However, it must be confirmed prior to legal commitment to purchase that the insurance recommended works were carried out and signed off as these were underground issues which we cannot see from above ground level. However, where visible there are no current issues.

We've been told that we cannot take over the vendors' existing insurance policy, although since it's not the original policy against which the claim was made, there doesn't appear to be any benefit to doing this anyway. We have, however, been able to obtain quotes from a number of insurers, albeit with higher subsidence excess (the lowest is £2500) and with some requiring additional conditions/checks to be made.

My question is would we be crazy to continue with the purchase? We're reasonably satisfied that the previous subsidence was relatively minor and is unlikely to recur. What is more troubling is that it's not clear that it's always going to be straightforward to obtain insurance cover in the years ahead. Also if we were to want to sell the house in the future, would other buyers be put off purchasing the property, because of the subsidence history?

Would it help to get hold of a copy of the Certificate of Structural Adequacy? And is it likely we could obtain this from the original insurer (I have checked that the insurer still exists)? Is there anything else we can do to mitigate the risks of not being able to obtain insurance, or are we worrying about nothing?

dacouch

Does the house price reflect it having previous subsidence (They're generally many thousands cheaper)

subsidence-newbie

Hi dacouch. It's difficult to tell, because there aren't many data points for prices of similar properties sold in recent years. Also the house is in demand - there were a number of potential buyers bidding for it.

dacouch

The other people may also be in the same situation as you eg the vendor / estate agent has not told them about the subsidence until they get closer to offer.

Not sure what the value of the house is but it should show a sizeable discount for the subsidence.

vaio

and you need to factor in your guess of what the insurance industry attitude will be in future years.

They seem to becoming increasingly risk averse and it might be that in 5/10/20 years time houses with subsidence history will be practically uninsurable & therefore practically unsellable.

There is evidence that this is already happening with flood risk.