How to answer insurance form question about wall cracks.

Annemos

Bucketfull. Have they provided an actual quote yet?   

When you get the documentation through, go through it with a fine toothcomb, to make sure there is nothing in there that you have inadvertently filled in wrongly. (Or perhaps inadvertently, failed to go in and complete details on another screen etc.)

(It can be difficult to spot everything on-line I think.)

So, for example, there is often a Statement of Fact that lists assumptions and declarations by yourself. Make sure it is totally accurate.

Also make sure that there is Cover for Subsidence and an Excess for it of not more than the usual 1000 pounds for example. 

Annemos

Update to my reply earlier at 10.55

Please see this attached Case. 

There are some things to note in here, which explain why the Homeowner lost and did not have a claim upheld. The Insurance Company also voided the Policy.

(The homeowner was claiming for an escape of water... but a crack was noticed.)


Please see the middle page, where it discusses what happened when her on-line policy request was taking place.  If a "yes" is responded to, then the screen should populate with other questions. (Are these easy to miss? I don't do on-line so I cannot comment. Could you have missed any?)

It also goes on to discuss how she then received renewal documents with declarations. And a telephone call. 

The conclusion is that during all these stages, she was given an opportunity to declare a crack but she did not do it. 

It then goes on to discuss whether she should have been aware that there was indeed a crack. And it was decided that she should have known. 


I am sending you this to show how very careful we have to be when we are asking for a policy.  And the sort of thing they are all looking at. 

Of course this applies to your current request for a new policy, as we have been discussing. 


https://www.financial-ombudsman.org.uk/decision/DRN-3409566.pdf


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What EXACT questions did you have to answer when you took out your Policy a Year ago? And what EXACT STATEMENTS are given in the Declaration/Statement of Facts and Assumptions which are attached to that Policy? 

I am now going to attach a case, where the Homeowner was asked a different set of questions. (I believe your Buyer's report does not mention the actual word Subsidence.) 

In this case it was deemed that the Homeowner could not be expected to know what Subsidence is. And it was deemed that any cracking could not have been wider than 1mm. (Your Survey said a hairline crack.)

So they had answered the questions posed to the best of their ability. 

https://www.financial-ombudsman.org.uk/decision/DRN-5317156.pdf


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Ombudsman case conclusions only apply to that particular Case being looked at. But they do show us Homeowners how the Insurance Industry operates. We start out knowing nothing..... so they help us to get into that mindset and language and concepts. 


I cannot judge all the facts and circumstances that you are in. Or what decision you should make. Or what might happen, if the Insurance Industry takes a look at your home..... and what positions they might take, given your own facts and circumstances. (How much weight would they put on that issue of you being recommended to get a Survey done, for example, but you haven't yet had it done.)

But you are going to have to try and work out, should you be submitting a Subsidence Claim on your old Policy before it ends? Or are you sure you are completely safe going with that new policy?  

MyRealNameToo

BucketFull said:

so does the insurer need to be informed separately about the cracks also?

The law on declarations changed a few years ago, for consumers it was a mixed bag with the consequences of incorrect declarations getting worse but on the positive side it clarified in law that if an insurer wants to know the answer to a question they have to ask it and cannot rely on a consumer simply volunteering it and questions must be specific and cannot be "is there anything else we need to know?" so no, if the insurer hasn't asked you dont have to volunteer but make sure there isnt a statement of fact that you've clicked "I agree" to that does state the property is crack free. 

Note that whilst they cannot void your policy for false declaration they can still apply the policy terms which is highly likely to exclude any pre-existing issues. 

Annemos

MyRealNameToo said:

 they can still apply the policy terms which is highly likely to exclude any pre-existing issues. 

Yes they can.

Fortunately for Homeowners in a few cases, the Insurance Company has not allowed them to apply it, due to all the particular facts and circumstances in those cases. 

Here are two of them. 

Coincidentally, they happen to both be with the same Insurance Company, but I have seen the argument discussed in other cases.  These two contain useful discussions around pre-existing issues and also the CIDRA aspect. 


Page 4 of this one....

https://www.financial-ombudsman.org.uk/decision/DRN-4698235.pdf

And Pages 2 and 3 of this one 

https://www.financial-ombudsman.org.uk/decision/DRN-5314608.pdf

MyRealNameToo

Annemos said:

MyRealNameToo said:

 they can still apply the policy terms which is highly likely to exclude any pre-existing issues. 

Yes they can.

Fortunately for Homeowners in a few cases, the Insurance Company has not allowed them to apply it, due to all the particular facts and circumstances in those cases. 

Here are two of them. 

Coincidentally, they happen to both be with the same Insurance Company, but I have seen the argument discussed in other cases.  These two contain useful discussions around pre-existing issues and also the CIDRA aspect. 


Page 4 of this one....

https://www.financial-ombudsman.org.uk/decision/DRN-4698235.pdf

And Pages 2 and 3 of this one 

https://www.financial-ombudsman.org.uk/decision/DRN-5314608.pdf 

The key difference between those two cases and this case is the fact the OP says they bought the house with the cracks being present whereas in these cases there is no comment of that. The first one does say that the property had issues before they bought it but states these were fixed (or hidden) pre-purchase so its not the case they were buying a property with an obvious/visible issue

There is an obvious issue of seeing a house worth £400,000 but paying only £300,000 because there is subsidence damage and then attempting to claim the money from an insurer... the money saved on the purchase price should be used to fix the issues. 

Annemos

Yes I agree, MRNT. 

My big concern with our case, is that a Survey had actually been done which mentions the Crack pre-purchase. 

And although it was only a Hairline crack which may or may not be Subsidence, the Poster did not go on to follow the recommendation to get the Drains checked out as soon as possible. 

In the second case, the Ombudsman actually mentions this issue 

 
"For example, there was never any evidence to suggest that the issue with the drains at the rear of the property pre-existed the inception of the policy. And on that basis, I’m minded as things stand to uphold the complaint." 


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I do wonder.............  If the Homeowner had bought the home. The Pre-purchase survey mentions the crack but with no actual mention of the S word.  (Homeowner knows there is a hairline crack, but as a normal Homeowner does NOT have the knowledge to be on alert about Subsidence or ground sinking).   The Homeowner them immediately had a drain Survey done and it finds there was a problem with the drains and the crack was likely due to those drains causing Subsidence and that damage is ongoing. 

He then immediately raises a Claim with the Insurance Company. 

Would that scenario have been any more secure for the Homeowner? (As long as the CIDRA responses when he took out the Policy were accurate?) It relies more on what the Homeowner should be expected to know and did they act promptly. 


EDIT...  

Here is another case that discusses that a Homeowner is not a professional and so does not have in-depth knowledge.

https://www.financial-ombudsman.org.uk/decision/DRN-5317156.pdf

MyRealNameToo

Annemos said:

I do wonder.............  If the Homeowner had bought the home. The Pre-purchase survey mentions the crack but with no actual mention of the S word.  (Homeowner knows there is a hairline crack, but as a normal Homeowner does NOT have the knowledge to be on alert about Subsidence or ground sinking).   The Homeowner them immediately had a drain Survey done and it finds there was a problem with the drains and the crack was likely due to those drains causing Subsidence and that damage is ongoing. 

He then immediately raises a Claim with the Insurance Company. 

Would that scenario have been any more secure for the Homeowner? (As long as the CIDRA responses when he took out the Policy were accurate?) It relies more on what the Homeowner should be expected to know and did they act promptly. 

As a claims handler I'd be questioning why they had a drains survey done immediately after buying. 

Maybe its innocent and they've found there is problems with sinks being slow to empty or toilets overflowing but I'd be suspicious that they may have had more knowledge than they are letting on. 

On the topic of subsidence you probably know more than I do; I think I am still ahead of you on reinsurance, capital and London market insurance though  

Annemos

And I have just looked again and that pre-purchase survey which did actually mention: 
 "Yes, an inspection of the drainage system by a Structural Engineer was recommended in the report."    A Drain Survey by a Drains Company would likely not have been sufficient anyway. 


Often I feel that all I really know as a fact, is that Subsidence is complicated and intricate with dozens of moving parts. 

I have a HUGE respect for the Ombudsman Team that deal with these Cases. Their ability to create a path through this swamp is truly awe-inspiring. 

MyRealNameToo

Annemos said:

I have a HUGE respect for the Ombudsman Team that deal with these Cases. Their ability to create a path through this swamp is truly awe-inspiring. 

I agree with a lot of their decisions, I certainly question some, both professionally and personally. 

Like any career there are some good ones and some not so good ones. I've worked with a few people that have done some time at the ombudsman, in particular when doing Part VII transfer which is the legal process to move insurance policies or current accounts etc from one firm to another. 

The process requires you to have an independent expert, share their report with all impacted customers and provide facilities for customers to ask questions and/or object. All objections have to be accepted, responded to, catalogued and then shared with the independent expert, regulators and the High Court. I hired one former ombudsman who was also an actuary to help with any technical questions asked and two investigators to deal with the more emotive objections. 

The latter were very good though generally, very accurate and got through volume but occasionally struggled to realise the customer was asking a standard FAQ thing but in a peculiar way. The former was a nice bloke, very thorough but god awfully slow. In the end we only had maybe 2 questions where we needed his technical knowledge and whilst many others were technicalish, like asking about SII ratios etc they needed someone with a few years insurance experience behind the front line not a FIA. I didnt complain too much though, got a lot of weekend working out of it which is as close to a bonus or overtime a contractor can hope for.