Buildings insurance renewal quote up by £4300 p/a...help!

Dr_Wu

I'll try to give you the quick/edited version here!

In-Laws (age 85 and 89) claimed with Saga insurance 4 and a half years ago for subsidence leading to cracking in the extension to their house. Saga have traced this to a nearby oak tree on council land causing dry soil leading to subsidence and Saga are currently (finally) about to commence works to rebuild the extension and do something about the offending tree.

Renewal quote for the buildings insurance came in today and it's risen from £700p/a to £5000 p/a (yes, I said £5000!).

Any advice would be welcome here, sounds like blackmail and a blatant attempt by Saga to recoup coming losses but my main question is this: If the in-laws don't renew with Saga, are Saga obliged to continue as planned with the works on the claim made 4.5 years ago as the in laws concern is, if they don't renew at the exorbitant price, Saga don't have to proceed with the planned works i.e blackmail.

I know it will be hard to find another insurer given the circumstances but still….£5K!

TELLIT01

With what would seem to be major subsidence I suspect any other insurer will be coming back with high quotes, particularly as the remedial work hasn't yet been done.

The alternative way of looking at things is that the premium hasn't been that high for the past 4 years. Little comfort I would agree.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6670862/buildings-insurance-renewal-quote-up-by-4300-p-a-help

Home insurance is written on a losses occurring during basis, doesnt even matter if you only discover the loss after the insurance has already ended and you are insured elsewhere the insurer at the time of the incident remains the one liable for dealing with it.

That said, prioritisation, gestures of goodwill etc can be impacted by if you remain with them or not to a minor degree. Have to say in my claims days my system didnt tell me up front if the customer was still with us or not and I can count on one hand how many times I went into the Serve team's system to see.

Saga these days are purely a broker so they havent sustained any losses. They used to own an underwriter that sat on their panel but that ended when they sold it to Aegis

https://forums.moneysavingexpert.com/discussion/comment/82020705#Comment_82020705

The majority will simply decline cover given there are major building works going on, a small minority may offer cover at a high price but excluding subsidence. I think they will struggle to find any insurers willing to take them on with subsidence cover other than their own insurer

Annemos

Dr_Wu,

Please can you take a look at your in-laws' policies for each of the last 4/5 years since the claim. (Including the year the claim was opened.)

Saga is just the Broker. Can you please check which company was the actual Underwriter Company for each of those years? You can see this detail on the Policy Documents for each separate year.

I am interested to see if your In-Laws have stayed with the same Company throughout. (That is the normal advice after a Subsidence Claim.)

subsidence_expert

Yes I’m sure it’s an attempt to;

a) recover costs from you, and

b) dissuade you from staying with them, hoping you will take your insurance elsewhere instead

under ABI Guidelines the insurer should offer continued subsidence cover “on reasonable terms” during and after a subsidence claim. The Financial Ombudsman has on numerous occasions asked insurers to reinstate cover where it was removed in breach of these guidelines, or to reduce excessively hiked premiums. Your in-laws may have some success if they made a complaint to the FO.

I’m guessing that the council oak trees have not been removed, so the insurer is concerned about the risk of subsidence to those parts of the property which might not yet be affected, and are not being rebuilt on a deep foundation. If this is correct I would be pressing for either tree removal or an effective root barrier between the trees and the whole building. Having said that, insurance does not cover the cost of preventing undamaged areas from suffering future subsidence. It’s a blurred line between “mitigation” (which is covered) and prevention (which is not).

But the FO should not allow excessive jacking up of premiums as is the case here. I can direct you to examples of FO decisions which made an insurer reduce premiums in such circumstances but I don’t think I’m permitted to post those here.

The FCA is also currently investigating unfair practices and breaches of the new “Consumer Duty” within the home and travel insurance arena and may welcome examples of such. A report to the FCA may result in the insurer making an effort to be fairer!

Bear in mind that most home premiums are invisibly “discounted” for not claiming, so when a claim is made you lose that benefit and a premium increase should be expected - not to the sort of degree here though.

dunstonh

For reference, the abbreviation for the Financial Ombudsman Service is FOS.

FO is more commonly associated with the Foreign Office.

Annemos

My own suspicion/pondering, is that the same thing may have happened here as what happened to me when I was with SAGA. (SAGA is a Broker and can have a panel of Insurers and Intermediaries that fluctuates and can fall apart.)

My own case…… 2018 Subsidence Claim opened up while on a Policy taken out with SAGA:

The Insurance Policy for the claim had SAGA as the Broker, Company A as an intermediate Arranger, Company B as the intermediary MGA (Managing General Agent) and finally Company C as the actual Underwriter/Insurer.

What should have happened is that Company C should have kept me throughout, because they did have Home Insurance Policies available through other channels/brokers.

But what actually happened is that the relationships between first Company A and SAGA fell apart. And then a year later the relationship between Companies B and C also broke down. (Due to takeovers, mergers, buyouts, "relationships only having a finite contract duration" etc, etc.)

So, 2 to 3 years into my claim, that breakdown happened, Insurer C was thus no longer on the SAGA Panel….. and at the next renewal, SAGA tried to pass me on to one of their other Underwriters on their existing Panel and none of them would accept me….. except one that would, but without Subsidence Cover.

I started to heavily research and to cut a long story short, complained repeatedly to the Companies B and C and was ultimately given a policy with Company C again, but through a different channel and I have remained with them to this day. (But this is now no longer available to me, as my Insurer C has just completely exited the UK Home Insurance Market!)

So back to the Poster's In-laws… I am wondering if the Company relationships have at some point broken down since the original Policy (which had the Subsidence Claim) was set-up. And we have reached a stage mid-claim (like me) where SAGA has offered it to their remaining existing Panel and the only one who would take it on has done so at a really high price.

If this is the case, we shall need to look at the links in the chain to find out where the Complaint lies and at what stage it has gone wrong. And we shall also need to know if that Company C is still in the UK Home Insurance Market. There is even a possibility that the Homeowners were actually moved away from Company C before this year. But the In-Laws and relative had not realised the implication of this switch.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82025030#Comment_82025030

What costs has a broker sustained @subsidence_expert ?

Not sure the Foreign Office would be too interested in someone's home insurance premiums.

It's the insured's responsibility for mitigation, its the insurers responsibility to fix the damage caused though it can be in their own interests to prevent reoccurring claims where practical. Because of the high cost of subsidence claims and the relatively low cost of root barriers etc it normally stacks up whereas if your properly starts getting its cellar flooded due to raising water table then most insurers won't pay to tank your cellar for you.

https://forums.moneysavingexpert.com/discussion/comment/82025275#Comment_82025275

Things can be even more complex, particularly for smaller brokers, often the broker is using software and that has a range of capacity providers on it, for specialist and business insurance the margins are worth doing things off system because you are talking premiums in the thousands with commissions of 20-30% often. Mass market consumer is a volume game with tiny premiums and commission often around 10% so you want straight through processing and not have people spending hours logging into another system, doing web quotes, manually keying in to the PAS etc to just try and get £20 commission.

So yes, intermediaries can fall out with capacity providers but it can also be capacity providers stop offering via the brokers chosen software or the volume of business being placed doesnt justify the cost of maintaining bespoke software connections etc.

Other times it's simply that the incumbent is outbid; a half decent MGA will often have a queue of carriers wanting to provide their capacity and so they can look at who's offering the largest capacity, best commissions, most favourable profit shares etc.

MGAs scare the hell out of me, controls around them are no way good enough, I've worked with carriers who have done what look crazy deals with them and celebrated wining a long pursued accounts. You can be happy with a relationship with an MGA and be happy to continue the relationship but if a competitor is willing to offer double the commission and not have a clawback on a profit share arrangement then you'll most likely loose the account if you arent willing to match the offer.

Dr_Wu

Sincere thanks for all the helpful replies so far, it really is a minefield.

The in-laws recently submitted a formal complaint to SAGA re timescale i.e. 4.5 years in and nothing as yet done, unreasonable increase in premiums and no clear plan as yet to address the underlying, root (sorry) issue i.e. the tree. They worded the complaint as a precursor to raising the issue with the "FOS" (thanks @Dunstonh, good to see you're still active here)

She (M in L) has had some success in that SAGA have reduced premiums from £5000 to £1800 p/a but this is for buildings insurance only and they are refusing to continue to insure her for contents insurance. I know insurers are bound by a code of conduct to continue to offer buildings insurance during a claim process (thanks @subsidence_ expert) but can the sneaky buggers refuse to continue contents insurance because a claim is not being made under this policy, just buildings?

Finally, how does this sound?

They have legal cover with SAGA

SAGA have established that the tree on council owned land was responsible for the subsidence

The market value of their house will definitely be impacted (?10-20% reduction) due to the history of subsidence

Is it reasonable to ask the SAGA legal cover team to take the council to court recover the reduction in market value?

As always thanks in advance for your help with this, it's very much appreciated.

subsidence_expert

A) I think the ABI Guidelines apply only to buildings so they are free to do as they please with contents cover. Can’t see how refusing contents cover helps them though??

B) Interesting point re loss of value claim against council. I’m not sure that’s ever been tested in the courts. I suspect that it might fail as the loss of value is (in theory) only a temporary loss. It’s generally believed that the value recovers after a long period of proven stability (ie 10+ years). It would be very hard to prove as well. Insurers generally don’t pursue recoveries against councils due to a market agreement between most of them, and I somehow doubt that the legal expenses cover would cover the cost of testing g this point in the courts. You would probably told that they wouldn’t want to spend time on it due to low chance of success.

Annemos

Good evening again. Many thanks for the update.

I am pleased to hear the premium was reduced, but it is disappointing to read about the Contents. I have not heard of this before. Is it more difficult to get separate Contents Insurance, if one has an ongoing Subsidence Claim?

(When I had my Policy with SAGA and then the Subsidence Claim…. it was actually only at that point, that I realised the Building Insurance was with one Insurer and the Contents Insurance was with a completely different Insurer!)

One thing to note, Dr_Wu: if MIL does have to go to the FOS, the Complaint is actually against the Underwriter/Insurer (NOT against Saga the Seller of the Policy).

Can you please be sure to watch out for this. Her Insurance Policy is taken out through the Insurer, not with SAGA. So, her Subsidence Claim Handling and Investigations and any subsequent Compliant are all against the Underwriter/Insurer shown on her Policy Documents.

(The Underwriter/Insurer is held responsible for the Claim Handlers etc)

===========================================

Re the Legal Expenses Cover, please check into the SAGA Policy Booklet for her particular Policy (which her Insurance Company uses as its Terms and Conditions). I think it might say the following:

Property issues:
Legal costs for a claim if you suffer nuisance, trespass or physical
damage to your home or your personal possessions.

We do not cover the following

Any incident relating to subsidence, heave, landslip, mining or
quarrying of land underneath your home.

===========================================

There was a big case which illustrated how a Council was not held liable, as they could not foresee that damage would occur. I will attach it here. I found some interesting remarks in this case: it was deemed that (in my words):

If Councils removed all trees near homes, we would live in a desert

Councils don't have infinite funds

It cannot be predicted which Tree(s) will go on to cause Building Damage.

Often, one's first reaction is to blame the Council for Council Trees, when they have done damage. But it was reading this Zurich Case which made me realise that it was probably a non-starter.

https://www.zurich.co.uk/municipal/articles/court-success-tree-root-subsidence-claims-importance-evidence

=========================================

Finally, another note of Interest…. a recent case that discussed Excess and Premiums after a Subsidence Claim. This Premium had doubled.

https://www.financial-ombudsman.org.uk/decision/DRN-6065624.pdf