I chose an AXA insurance & now I homeless

bouncydog1

£127,000 does not sound very much for rebuilding costs, so I am wondering if there was a large element of under-insurance which is why you have only been left with an offer of £40k. as others have said, we really need to know the full facts as at the moment we have lots of little bits that do 't fully fit together.

C_Mababejive

Surely houses are relatively cheap to build and it is just the cost of land which in our feudal structure you have a lease on,and also the ramping/marketing by vendors/builder/estate agents which embellish final prices?

norwichmanneil

12 December 2013


Your Subsidence Claim

I refer to our most recent discussions in connection with your insurance on 4th December 2013. As advised, we have established the overall extent of loss falling for consideration under the terms of your insurance policy with AXA. This relates to claim costs falling for consideration under the building policy together as well as the contents policy and this also includes allowances that can be considered in respect of alternative accommodation charges.

We are aware that your principle concern is in connection with the amount payable under the terms of the building policy. The amount payable under the policy is limited by the building sum insured detailed within the policy. AXA have advised that the building sum insured for your property was £127,000. In addition to this the policy provided for payment in respect of debris removal and professional fees up to a limit of 10% of the building sum insured which equates to a further figure of £12,700 giving a total amount payable under the building section of the policy at £137,900.

These limits were advised to you from the outset as detailed in our letter dated 17th January 2011 (copy enclosed). During the course of your claim it became evident that the limit figures would be exceeded due to the need to provide for continued temporary support and shoring to the structure as investigations took place and ultimately to allow demolition to be completed to realise the actual loss in the market value of the property. The financial implications were previously set out in our advices to you dated 30th January 2012 (copy enclosed).

In order to secure the demolition of the building AXA have incurred costs in the overall sum of £99,415.88 These costs may be summarised as:

Emergency attendance – BMC East £3,857.99
Shoring and support work and continuing
hire costs ( Norfolk Scaffolding) £36,888.67
Demolition costs – BMC East £43,520.74
Road closure notice – Norwich City Council £1,050.00 £85,317.40

Engineers fees – Canham Consulting (initial attendance,
co-ordination of temporary works and subsequent
works including securing Part Wall agreements with
adjacent property owners) £14,098.48

Total costs £99,415.88

This amount has been incurred directly against the maximum amount available under the terms of the insurance policy leaving a nett amount payable in the sum of £40,284.12 (£139,700 less £99,415.88).

Separately, AXA have met the costs of the specialist investigation undertaken at the property to establish the cause of the damage. This has been undertaken as part of the claim investigation process and has not been treated as a charge against the available building insurance cover.

In addition, AXA have settled your claims under the contents policy in full. AXA have also met or reimbursed the full costs of alternative accommodation provision for the entire period commencing with the occurrence of damage up to the date when demolition works for the property were completed in May 2012 together with a further period to 22/07/2012 to allow reasonable time for you to source your own arrangements for housing / accommodation as a normal living expense for your own account.

During the course of the arrangements to progress the demolition works the investigations established that repair of your property was not a viable proposition because of the constraints of the site. Consideration was therefore given to calculation of the balance of your claim on the basis of loss of market value.

Using professional valuation by Chartered Surveyors, the open market value of the property was previously assessed at £125,000. The intended sale of the cleared site to the local school was initially intimated at £10,000. This would have realised a loss in value of £115,000 if the sale had been concluded. The sale of the plot remains an outstanding issue and you consider the value of the plot to be nominal, in effect you consider there to be a full value loss up to £125,000 figure.

Despite the extent of your further loss to a maximum figure of £125,000, insurer’s liability under the terms of the policy is restricted to the building sum insured figure and the 10% allowance for debris removal and fees in the overall sum of £139,700. The further sum payable under the terms of the policy therefore equates to £40,284.12.

We have detailed these figures previously to AXA. We now enclose a Form of Acceptance detailing the amount payable under the terms of the policy which should be signed and returned to allow release of the balance of monies due. You will note that the form is claused to acknowledge the previous payments released under the terms of building policy.

We trust the foregoing clearly details the limits available under the policy and we await hearing from you shortly to allow the final payments to be processed.

jonesMUFCforever

Do I take it then that if OP had an unlimited cover type of policy then all this would have been covered and he still would have had money to rebuild or have I missed something?

dacouch

I seem to remember an Ombudsman Complaint about subsidence that was in effect similar to this case, I can't find it at the moment, if anyone else can please post it.

You may be able to squeeze a little bit extra out of them due to the first paragraph of page 17 depending on when your renewal date as opposed to the claim date

http://www.axaconnect.co.uk/assets/0/109/135/198/210/211/237/77d7111f-e8bb-4047-9573-d3ca775e3789.pdf

weejonnie

jonesMUFCforever wrote: »

Do I take it then that if OP had an unlimited cover type of policy then all this would have been covered and he still would have had money to rebuild or have I missed something?

I assume so (unless there are limits under the policy for demolition costs). AXA currently offer a policy with £1,000,000 limit.

One has to ask whether AXA has been efficient in its claims processing - incurring costs of £100K (approx) to demolish what is apparently a relatively small property seems exorbitant.

Note that many policies have a £250K limit - this claim would be approaching that amount assuming that the property is still to be rebuilt.

At the moment I cannot think of anything that can be realistically done - other than asking AXA to provide evidence of similar charges being made in similar circumstances. (Obviously a complaint will have to be raised to the FOS so they can investigate matters in greater depth.)

weejonnie

dacouch wrote: »

I seem to remember an Ombudsman Complaint about subsidence that was in effect similar to this case, I can't find it at the moment, if anyone else can please post it.

You may be able to squeeze a little bit extra out of them due to the first paragraph of page 17 depending on when your renewal date as opposed to the claim date

http://www.axaconnect.co.uk/assets/0/109/135/198/210/211/237/77d7111f-e8bb-4047-9573-d3ca775e3789.pdf

I found the following on the FOS website

---

Occasionally, the cost of stabilising the structure and repairing the superstructure is likely to exceed - or almost exceed - the amount it is insured for (which should cover the cost of demolishing and rebuilding it). In these cases, the property is “written off”.
If the property is beyond economic repair, the insurer may offer the consumer a cash settlement representing the reduction in the property’s value. This amount will be the sale value immediately before the damage less the residual value after the damage. We expect these values to be calculated using expert evidence - for example, from surveyors or reputable estate agents with knowledge of the local property market.
We sometimes see complaints where the consumer is requesting an additional payment after the subsidence damage has been repaired and the property fully reinstated - because they feel the property has decreased in value as a result of the damage.
Most policies expressly exclude this. We usually say that if the property was stabilised and the superstructure properly repaired, there should be no reduction in value.
Sometimes the amount a property is insured for does not cover the cost of stabilising the site and repairing the damage to the buildings. We see complaints where once the policy’s maximum amount has been reached, the insurer tries to stop payments relating to the claim - even though the necessary stabilisation and/or repair work is not complete.
But when an insurer chooses to repair damage under an insurance policy, it enters into a ”contract to repair” - which is separate to the contract of insurance. In most cases, this means that the insurer is not able to limit the benefits under the contract to the amount the property is insured for.
So we are likely to tell the insurer to continue to meet any costs of stabilisation and repairs beyond that amount.

---

http://www.financial-ombudsman.org.uk/publications/technical_notes/building-subsidence.htm


There is some hope in this - if the property was beyond economical repair then AXA might have treated this differently, as in the first paragraph.

Spikey1

Neil.....this is way too complex to be sorted out on a chat forum. like I've said before you need representation.


I'm still not clear on who was project managing those works. If your Insurers or Crawfords have spent £90k+ on demolition, fees and completely ignored the policy limit then they can't hold you responsible for their MASSIVE OVERSPEND. I'm not saying that they have been negligent....it may be the case that they were in a very difficult situation. However, if it was them (and not you) who were in contract with the various contractors and it was they (and not you) who decided to keep spending the money despite the £12,700 limit being exhausted then that's their loss and not yours. You have an insurance contract which gives you £127,000 REBUILDING COSTS.....the insurance contract does not allow your Insurers/Crawfords to 'nick' some of that from you because they allowed a completely separate limit for the demolition/fees to be massively overspent.


Can you remember if they asked you to agree to this at any point in time (there is an inference in their letter that they may have got agreement from you to this ?).......if so, you will be in a difficult position.


Regards

sithemadmonkey

I would also get an official FOS complaint in now while you're at it. You've nothing to lose, and still have the option of the courts if they don't find in your favour.

Sorry if I've missed it, but did you respond to post #2? You should be able to recover any uninsured losses from the water company, have you looked into this? Did you have legal cover on your home insurance (or any other cover that may help) at the time?

TurnUpForTheBooks_2

Neil this is outrageous.

AXA and Crawfords should be ashamed. Especially since there appears to be easy subrogation against the water company which AXA could have been working on months and months ago. This is not how insurance is supposed to work and unless there is actually real doubt that the water company is involved, I just cannot understand why AXA and Crawfords have even contemplated leaving you so much in the lurch. It is a disgrace.

Is that local school adjacent? Could access have been granted via their land to your site for rebuilding? Whose idea was it to sell anything to the school? Is it a local authority school? Have Crawfords spoken to them? There are some interesting land-deals wangled around Norwich in relation to local authority land. Too many.

Sounds a bit strange for discussion of a sale to the school even to appear as a paragraph in the final offer letter since the value is so low. I note they made no suggestion of you keeping the site in that offer. Why would you sell it for any low sum unless you were forced to? Your life is dependant upon correctly transacting much bigger sums at the moment. Is there a hidden agenda from Crawfords? Does someone else have their eye on your site as some kind of distressed sale?

The entire industry has been issuing advise to insure on the basis of rebuilding cost for decades. Neil did that. Unless Neil lives in a bungalow like Kelvedon Hatch in Suffolk which is actually a deep ex cold-war bunker and told no-one, there is no underinsurance that he can be taken to task over. AXA have clearly sold Neil a product which is unfit for purpose and interestingly it is one which FSA/FCA have already made them change due to unfair contract terms elsewhere in the wording.

I agree that Neil must press urgently impress upon FOS what has happened with this case, and even tell them that it will now be played out here on MSE because it sounds like an extremely important barometer of the fitness of AXA to even have a licence to conduct a UK insurance business. You should perhaps also consider if at some point you take some initial legal advice, Neil, from a major firm of City lawyers who specialise in insurance (fight fire with fire). This looks to me like one where they might see their way from the outset to a good chance of recovering costs directly against AXA and Crawfords. If they were able to advise you that after an initial consultation, you might not concern yourself too much that they charge £600 per hour!

But first, can we also see the almost two year old 30th January 2012 letter Crawford referred to as if it contains some kind of justification of the present position?

weejonnie's last post is extremely pertinent. There is no way that AXA would have driven me or dacouch or weejonnie or Spikey1 or many others into the same situation if I we were in Neil's place because we are no insurance laymen - we can sniff which way the wind is blowing and know how to stop bad practitioners in their tracks. So why should it be tolerated in Neil's case? The answer is that it should never be tolerated and must be stamped on as an example for insurers to fear ever to let happen again. It should never have become a case for consumers to learn to fear.

I agree that this is complex and needs serious off internet attention, but publishing it on the internet is what will have given this one the best chance of a proper outcome because it is beginning to look such a cut-and-dried example of insurance industry bad practice and incompetence. The internet airing will give it special priority now.

I will summarise with the most fundamental principle of all General Insurance: that is the principle of indemnity.

I see now that the internet is full of interpretations of the principle that have clearly been crafted to match the selfish insurers viewpoint which is that the insured person does not profit from the loss. However, in return for the premium and declaring the rebuilding cost for rating, a home buildings insurance policy promises to indemnify the policyholder for all property damage claims of this type whether you call it subsidence or escape of water or flood damage. That means putting the policyholder in the same financial position with regard to the property insured as persisted before the loss occurred.

That clearly has not happened in this case. The insurer and their agent Crawfords failed to manage the claim and are now barefacedly using costs of failed management as part of what looks to me to be a frankly potentially fraudulent calculation which offers Neil far less than indemnity.

£37000 on scaffolding for example to hold up a ruin that no-one lived in after it was damaged or before it was knocked down?? And £47,000 to shoring up/demolition contractors to quickly come in and hold it up for the scaffolders to take over, and then come back afterwards to knock down. Great business for local scaffolders and demolition men - did the "management" go like this?:

• Now then, BMC East, hold up! Here's a building that might have to be knocked down. Can you hold it up for us before the scaffolders get here ? And maybe we'll let you knock it down later? Not sure how long it'll take for insurers to make up their minds, but we'll give you three or four grand now, and make it up to £47,000 from Neil's £137,000 maximum claim fund if you knock it down later! Deal?
• Now then. Norwich Scaffolders. We'll give you £37,000 to take over from BMC East and continue to hold it up until the demolition firm comes back or ... well, just scaffold it okay? We'll worry about how long later. Deal on that one too?
• And Countrywide accommodation - can you take the policyholder of our hands while we spend his £137,000 claim fund with our usual contacts and prevaricate on whether to hold it up some more or knock it down? Great!
• And consulting engineers, you'd better do one of your usual subsidence reports for us. Fifteen grand? Yes ok - must have one on the file because we are handling it as a "subsidence" claim. They're expensive because of all the specialists we need. No sweat.
  
• Great, and while we're at it we'd better put in Crawford's preliminary invoice for all this specialised adjuster work - we get some complicated cases you know but AXA use us because - well - they've always used us and we are one of the big two, and anyway, we have a special relationship.
  
• Er ... anyone totted up lately what we've spent?
• Hmm ... January 2012 ... better write to the policyholder and cover ourselves with a hint of how out of control it could all get ... Neil doesn't understand insurance, does he? Not going to give us headaches, is he? Great - one less thing to worry about. Carry On!

Yes I made it up, but you really couldn't make this one up or could you?

Neil should be indemnified. The claim handling lash-up is no part of Neil's indemnity calculation. As the policyholder, Neil simply contracted to pay the premium based on declaring an appropriate rebuilding cost as best he could as a punter, and any other information they might reasonably appreciate would affect the underwriter's decision to quote a standard rate. If Neil knew the place could never be rebuilt for £127,000 when he insured it, then he should have said so, but clearly he had no crystal ball. He acted very much like any lay customer would have done.

Neil must be indemnified and I very much look forward to reading here that AXA have looked at it again to save face, or to avoid sanction. I don't mind which, but it must happen.

Meantime, Neil, can we see that two year old letter which they have referred to in the offer?