Possible subsidence - How to get insurance

organised.retreat

Hello

We are intending to move into a c.1900 property in SE, London - an area with a moderate risk of subsidence. We originally had a standard HomeBuyers survey (rather than a full structural...) which reported, among other things, that there was evidence of past movement;

"There are general indications of uneven movement... such movement however is considered to be longstanding and the risk of further movement taking place is acceptable."

Based on this we have progressed, organised the mortgage etc. However, we then decided to get a more comprehensive buildings survey. This has indicated the the movement may be progressive and that further inspection/monitoring is needed, with trenches and soil samples etc.

"We believe the movement may be progressive and recommend digging a trail hole and further investigation into the soil conditions and depth of foundations"

After much discussion, we decided we would like to progress and reduced our offer based on the estimate of the work required. We are happy to live with the disruption that any work would require and, after discussions with the surveyor (RICS) decided it was a risk we were prepared to take.

My question is (finally!), how do we go about getting buildings insurance? I've read that lots of people have enormous difficulties getting insurance for subsidence prone or underpinned properties. However, we have one report (albeit less thorough) that states there is no movement and another that says we need to monitor it. Since the first survey was enough to convince the mortgage lenders, how should we approach the insurers?

Any advice would be greatly appreciated.

cattie

I don't know the actual answer to your question, but I do know that if a house has had structural problems whilst with an insurer, & the house gets sold, the existing insurer has to agree to continue to offer buildings insurance on the property to the purchaser. Any further problems are then considered a continuation of the original claim. The premium will usually go up when the new customer take over & this could be in the range of a 20% increase on the annual premium, depending on just what remedial work was needed & the cost of it.

The best way forward might be for the existing owners to make an enquiry with their insurers regarding monitoring the structure. Then when you buy the property, if monitoring is in progress, any possible claim will be asigned to you as new owner.

If you can get the name of the owners insurers, you could try phoning their subsidence claim department & asking for general information about the situation. This is what I did before contemplating buying a property that had had some remedial work carried out & my mind was put at rest by actually speaking to an advisor.

organised.retreat

Cattie

Thanks very much for your reply - it sounds like there may be hope!

However, I have a couple of questions;

When you say,
"the existing insurer has to agree to continue to offer buildings insurance on the property to the purchaser"
Do you mean they are legally obliged or is it more a case of a general rule?

I know that the vendors have insurance with Halifax. When speaking to them should I explicitly identify the property and suspected faults or should I discuss it in general, hypothetical terms? I am concerned that once I identify the problem the insurance company will simply walk away.

Thanks for your help once again.

Jonbvn

AFAIK, when a property changes hands, the insurer has no obligation to continue providing cover.

Anyway, there is some hope. Check out this website.
http://www.subsidencebureau.com/previous_subsidence.htm

Debt_Free_Chick

organised.retreat wrote: »

I know that the vendors have insurance with Halifax. When speaking to them should I explicitly identify the property and suspected faults or should I discuss it in general, hypothetical terms? I am concerned that once I identify the problem the insurance company will simply walk away.

I think your only option is to get the vendors to make a claim on their buildings insurance.

If you try to take out insurance with the Halifax, I have a feeling that there might be a question on the proposal form which might cause a problem. It shouldn't do - as Halifax already insure the property and already have the risk of a claim on their books. But it would be far simpler all round if the vendors registered a potential claim for subsidence.

silvercar

If a house had previously had subsidence that had been rectified and there was no further signs of movement and the current insurers were prepared to continue cover, I would consider buying.

If a house had recently identified movement, that hadn't yet been treated, that could be ongoing, I would run a mile. Subsidence claims can take years to reach a conclusion, can require the owner to move out while the property is underpinned, are blighted in terms of future sales potential and are far more hassle than they are worth.

organised.retreat

Thank you all for your replies.

We have reduced the price of the house significantly so that we can orgnaise the work ourselves. Once the insurance company is involved then I can imagine it will take years to fix.

The problem we have is;

there may be no actual movement - i.e. it's all historical and therefore walking away would be a shame.

if there is movement it may be easly rectifiable (i.e. no underpinning)

My concern is that as soon as subsidence is mentioned then insurance companies wash their hands of the property and we would be stuck with massive premiums and problems with resale. It could be that there's nothing wrong.

If we convinced the current vendors to start the process and nothing was found (or maybe only slight rectification) would it be impossible to ever change insurance companies?

silvercar

Now that you have found out this:

"We believe the movement may be progressive and recommend digging a trail hole and further investigation into the soil conditions and depth of foundations"

you are stuck with the existing insurers for the foreseeable future. At least until any problem has been dealt with and shown to have stopped further movement.

This applies whether you do the work yourself or through insurance. The subsidence would have to be declared when you apply for an insurance policy.

Badger_Lady

It's always possible to get insurance as long as the problem has been resolved.

Don't worry about changing your insurer now - get it sorted and then think about a new insurer if you want to later. You will always be an increased risk, acceptable to only some insurers and at a higher premium than average, but you will be able to get insurance as long as your building is sound and maintained as such.

Have you gone back to the vendors regarding this issue? They should be as keen as you to push forward with a claim, having found a buyer that's willing to purchase despite such an awful survey!

WaveyDave_2

I asked a similar question on here about a year ago. Silvercar gave me a similar answer to the one he's given you. I walked. I am glad I walked -

You have no idea how much the repairs will cost until you have dug a trial pit.

You have no idea the extent of damage until you have dug a trial pit.

The vendors (like mine at the time) may not allow you do dig a pit, if they do, who pays? If you pay, and your purchase falls through, that's money lost, but they now have the structural position of the house for the next buyer, courtesy of you.

A new insurer will not touch you while there is an investigation underway.

If you cannot get insurance, you will be unable to mortgage the property. (You may struggle anyway when the house is valued, depending on the valuation given).

If you are tied to the current insurer, you are at the mercy of their pricing.

It takes years for subsidence repairs to be proven.

You will struggle to sell, should you ever choose to.

Sorry to be the barer of bad news, but having been there, the best thing that happened to me was not proceeding. I have now bought a much nicer house in the same area.

WaveyDave_2

One other thing, you said you are happy to live with the disruption. Depending on the repair works needed, you may not be able to live in the house. If for example piles are needed, this may involve taking the floors up etc.