A ‘new’ insurer believed that subsidence to an entire terrace had been happening before it took over responsibility for insurance. We looked at the facts to find a fair outcome.
What happened
When Arnold and Barbara bought their terraced house, they took out buildings insurance through the bank that provided their mortgage. Ten years later, a different insurer took over the provision of insurance. The following year, Arnold and Barbara made a claim for subsidence.
The insurer thought that most of the damage had happened before it started providing insurance for the property. It said that settlement and subsidence had been affecting the whole terrace for some years, causing long-term distortion and fracturing to the couple's house. And, while there was some slight general continuing movement, subsidence movement of the floor had occurred before it had started to insure the property. So it declined their claim.
Arnold and Barbara disagreed and felt the insurer acted unfairly, so they complained. Unhappy with the outcome, they contacted us and made a complaint.
What we said
We checked all the facts. The insurer said it was liable only for damage that had occurred when its own policy was in force. For that reason, its engineers' schedule of repairs left out general significant distortion to the property. It only concerned the damage they thought had occurred since the new insurer had taken over.
The insurer considered the distortion to be historic, rather than the result of the recent subsidence. It said the fact that ‘corrections’ had been made in the past confirmed this.
Arnold and Barbara said that substantial movement had occurred since they bought the property, and it had caused considerable distortion. They said that cosmetic repairs and decorations had been carried out from time to time, when damage and distortions became visible.
They were aware that floorboards and joists had been replaced before they bought the house, but understood that this was because of woodworm and rot.
The insurer didn’t consider the Association of British Insurers’ (ABI's) 'Domestic Subsidence Agreement' to be relevant in this case, because it excluded damage that had "occurred before an insurer took on an insured risk".
However, we established that there was no relevant period when the property had not been covered by buildings insurance.
It was thought some of the distortion had occurred after the point that the new insurer took over. However, it seemed likely that much of it had occurred before that point – but after Arnold and Barbara first moved in and took out insurance.
We said that the Association of British Insurers’ Agreement was relevant. And, as the property had been continuously insured, the insurer should deal with the entire claim and couldn't exclude damage that pre-dated its own policy.