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This section of the website describes how we approach complaints involving buildings insurance disputes about subsidence
Subsidence is the downward movement of the site on which a building stands – where the movement is unconnected with the weight of the building. Essentially, the soil beneath the building’s foundations is unstable.
Most household insurance policies – and some commercial property insurance policies – cover loss or damage caused by subsidence, heave and landslip. But they only cover the cost of repairing the loss or damage. They do not cover the cost of preventing further subsidence.
This means the cost of repairing damage to the superstructure is covered – for example, cracks resulting from the differential movement of the building. But the cost of stopping the building from moving is not covered.
In reality, to carry out an effective and permanent repair, the insurer will usually have to carry out work to stop the movement before repairs to the superstructure can start (unless it has already stopped).
Subsidence cases are usually complex – involving expert evidence and technical data – and are among the complaints that can take the longest time to resolve.
Subsidence cases that consumers refer to us usually involve the following complaints.
Subsidence is usually caused by one or more of the following situations.
Clay is made up of about 30% to 35% water. This means that soil with a high clay content can become "desiccated" as a result of nearby vegetation sapping the water – particularly during long hot summers.
When this happens, the volume of the soil decreases and the building's foundations subside. This is one of the most common causes of subsidence.
A significant or long term escape of water can wash away the fine particles of the underlying soil. When this occurs, the volume of soil beneath the property reduces and the property foundations subside.
If the subsidence is caused by an escape of water, the consumer ought to be able to bring their claim for loss or damage under the "escape of water" clause of their insurance policy. This usually has the advantage of involving a lower policy excess.
A "solution feature" is an erosion of the underlying soil, which results in an underground cavern. This eventually gives way and may cause subsidence to any buildings above or nearby.
The first sign of a solution feature is usually a small hole appearing at the surface. It occurs in limestone or chalk. It is often triggered by an escape of water or a rise in the water table.
Buildings sometimes subside as a result of the collapse of underground mines – in many cases, mines that have long been disused.
Although this is a valid "insured event", there may be a third party who can be held liable for the damage – for example, the National Coal Board (or its successor). The insurer should still deal with the consumer’s claim. But it may be able to recover what it pays out under the consumer’s insurance policy by bringing a claim against the third party.
All properties will settle by a small amount in a relatively short period after they are built. This is caused by the weight of the building compacting the soil that its foundations rest on.
However, significantly more soil " compaction" than would usually be expected may be caused by:
This may result in considerable downward movement of the property and damage to the superstructure.
As organic fill decomposes, it loses volume and resilience. The weight of the structure will cause the fill to compact and the structure to move downward.
If a tree is identified as causing structural problems to a property, several different remedial measures are available, including:
The insurer will normally instruct an arboriculturalist to advise on the appropriate tree-management remedial measures.
Management of trees does not always solve the problem as anticipated, in which case it may be necessary for further remedial measures and repairs.
Occasionally, over-enthusiastic tree management can actually have the opposite effect to that anticipated: the soil becomes over-saturated with moisture and this can result in the ground swelling up (called "heave"). However, this is rare.
If a third party – for example, a next-door neighbour – refuses to allow their trees to be reduced or removed, the insurer can take legal action. But we expect it to consider the impact this could have on the relationship between the consumer and the third party – and discuss the situation with the consumer before proceeding.
Without taking legal action, the insurer cannot force a third party to reduce or remove their trees. But if it is not prepared to fund legal action – or if the consumer withholds permission for the legal action to go ahead against the third party – we expect the insurer to find another way to stop the movement, so that it can repair the subsidence damage.
The Association of British Insurers (ABI) published its Domestic Subsidence Tree Root Claims Agreement in 1997. Signatories to this agreement should not pursue recovery actions in the courts against the domestic owners of trees and/or their insurers for subsidence (or heave) caused by encroaching roots unless the owner was aware of the problem and failed to take reasonable preventative measures.
This agreement does not apply in relation to legal action against local authorities or non-domestic landowners.
Most properties, particularly those of traditional construction, will suffer from cracking to the superstructure at some point. Cracking in itself is not evidence of subsidence. It can be caused by a number of factors, which are often uninsured. These include the following situations.
Settlement is normally the downward movement of the site on which a building stands – due to the weight of the building. Occasionally it can also be "self-weight" – where the weight of fill material compacts the soil beneath it.
Most new buildings will settle during the first years of their existence. This sometimes results in superstructure cracking – giving rise to fears of subsidence. But there may be no structural problems or serious damage if the building moves uniformly.
The hallmark of subsidence is differential movement – in other words, different parts of the building moving at different rates. This will often not be present in cases of settlement – although buildings do sometimes settle in this way.
If the insurance policy fails to expressly exclude settlement (and "consolidation" and "compaction"), we may treat it as subsidence – and conclude that the claim should not be rejected just because the movement is connected to the weight of the buildings.
This is the expansion and contraction that occurs seasonally – or while new buildings dry out. Masonry is particularly susceptible to thermal movement. During the summer the masonry heats up and expands. And during the winter it cools and contracts.
This can cause cracking. The problem is particularly acute where no allowance has been built into the structure to take account of this movement.
The cracks that result from this may be unsightly. But they are not structurally dangerous – and they are not covered by subsidence.
Lintel failure is characterised by diagonal cracks above windows and doors – and can usually be diagnosed from the pattern and position of the cracks. It happens where a lintel – a solid support for the brickwork above the opening, usually made from steel or concrete – is missing or is inadequate.
Because cracks caused by lintel failure are similar in appearance to those caused by subsidence, lintel failure can sometimes be mis-diagnosed.
Lintel failure is caused by poor design and/or workmanship – or is simply a failure of the material the lintel is made of. This means it will not be classified as subsidence. In fact, many insurance policies expressly exclude lintel failure.
Sulphate damage occurs as a result of a chemical reaction – usually triggered by water – between cement paste in a concrete floor slab and sulphates in the filling under the slab.
The symptoms are similar to those caused by "heave" (where the ground moves upwards). This means that sulphate damage is sometimes misdiagnosed.
There is usually no cover for damage caused by a sulphate reaction unless it is triggered by some other insured event – for example, escape of water from water tanks or pipes.
Buildings sometimes appear to suffer subsidence damage due to faulty design and poor workmanship – neither of which are insured. Examples include situations where:
Many insurance policies provide no cover for subsidence damage to other parts of the property defined as "buildings" – for example, patios, paths and terraces – unless the "main residence" is also affected by the subsidence.
Each policy differs in how it defines the "main residence" or the "buildings". Some policies include outbuildings and garages as part of the "home" – others don’t.
We often see complaints about this restriction on insurance cover. But we do not view it as an unusual or onerous restriction. As long as it is clear and unambiguous, we do not expect insurers to specifically draw the consumer’s attention to it.
When considering these claims, the most important factor we look at is whether the main structure has been damaged by subsidence.
Many of the subsidence complaints we see result from the insurer – and/or its loss adjusters – failing to communicate with the consumer and manage their expectations.
We expect insurers to make consumers aware at the outset that subsidence claims are generally complex – and may involve lengthy and inconvenient investigations and repairs. We also expect them to keep the consumer up-to-date on the progress of the claim – and to make sure that they are consulted, where appropriate.
Finally, we expect insurers to carry out a thorough investigation into the cause of the loss or damage as part of considering the consumer’s claim. If they do not, we may ask them to reinvestigate the claim.
For an investigation to be sufficient, one or more of the following will usually have taken place:
Useful data can be obtained by monitoring over a relatively short period. While twelve months is not unreasonable so that all the seasons can be covered, monitoring for longer periods is likely to be of little practicable use.
Underpinning is generally seen as the most permanent and superior remedy. But it is not always necessary.
A building can sometimes be stabilised by other remedial action, such as repairing leaking drains, removing vegetation, removing other external causes, or simply providing additional strengthening.
The more serious cases of subsidence may require foundation strengthening. This can be done in a number of ways:
We will examine expert opinions and decide whether the proposed (or completed) remedy is the one that was recommended. If there is conflicting expert evidence as to the appropriate remedial measures, we will take a view on which is the most persuasive. Very occasionally, we may ask for further independent evidence.
Once the property has been stabilised, repairs to the superstructure can be carried out. Cracks can be filled and redecoration carried out. Occasionally the masonry will have to be strengthened.
We sometimes receive complaints that the cosmetic repairs carried out are inadequate. These types of dispute are not really about subsidence – and so we will treat them in the same way as other disputes about repairs under insurance policies.
Occasionally a property is "written off" – if the cost of stabilising the structure and repairing the superstructure is likely to exceed (or almost exceed) the sum insured (which, theoretically, should cover the cost of demolishing the home and rebuilding it).
If the property is beyond economic repair, the insurer may offer the consumer a cash settlement that represents 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. The values should be determined by expert evidence – for example, from surveyors or reputable estate agents with knowledge of the local property market.
We sometimes see complaints where the subsidence damage has been repaired, and the property reinstated, but the consumer is requesting an additional payment – because they feel the property has decreased in value as a result of the subsidence damage.
Most policies expressly exclude this. And we generally decide that if the property is stabilised and the superstructure is properly repaired, there should be no reduction in value.
Sometimes the sum insured may not be enough to pay for stabilisation of the site and the cost of repairing the damage to the buildings. We see complaints where the insurer tries to stop payments in relation to the claim, when they reach the total of the sum insured – even though all the necessary stabilisation and/or repair work has not been carried out.
When the insurer has chosen to repair the damage, it has entered 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 repair" to the "sum insured" set out in the insurance policy.
This means we are likely to require the insurer to continue to pay the costs of stabilisation and repairs beyond the "sum insured".
We sometimes see complaints where the consumer changed their buildings insurer and then made a claim for subsidence. The new insurer says that the damage caused by the subsidence pre-dated its policy and so should be covered by the previous insurer – but the previous insurer does not agree.
The Association of British Insurers (ABI) published its Domestic Subsidence Agreement to deal with this issue. In summary, this states that every insurer subscribing to the agreement will deal with "change of insurer claims" as follows:
Whether or not the bulk of the damage occurred prior to the start of the current policy is irrelevant. This is clear from the guidelines to the Domestic Subsidence Agreement – published by the ABI in September 1994. These guidelines set out at question 5 that " the only practical solution is for the Agreement to be driven by the date of notification".
Of course, if the consumer was, in fact, aware of subsidence when they took out the policy – and failed to disclose this – the insurer may still be able to avoid the policy (in other words, treat it as if it never existed) on grounds of material non-disclosure.
However, being aware of cracking is not necessarily the same as being aware of subsidence – and most consumers do not have expert knowledge of such matters. So establishing exactly what the consumer knew when they took out the policy is extremely important.
The Domestic Subsidence Agreement does not apply if there has been a change of policyholder due to a change in ownership of the property.
Most policies specify that they cover damage that occurs only within the insured period.
The Insurance Ombudsman Bureau (a previous ombudsman scheme) decided that insurers are only obliged to repair damage that occurs after the start of the policy – unless that damage cannot be properly repaired without effectively repairing some or all of the previous damage.
In this case, the insurer must include in its settlement of the claim the previous damage that has to be repaired.
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.