A Bit of History
Anyone who’s ever erected a fence in clay soil using timber posts knows that you can hammer these into the ground when the clay is soft and the posts will stand firm but when you check your fence at the end of a dry summer your previously firm posts will have worked loose because the clay soil around them has dried and shrunk.
Our old terraced houses always move on a seasonal basis; cracks will occasionally appear and be filled each time we re-decorate; doors sometimes stick and need easing; windows and floors occasionally go out of level. How many of us can remember wedging bits of cardboard under the legs of a wardrobe or chest of drawers to make it stand straight? Or even sawing a bit off one the legs of a table for the same reason!
So, when did subsidence first appear and why is it such a problem to everyone now? With phenomena like this it is often very difficult to put an exact date on it. In the case of clay subsidence, however, we are able to put an exact date on it. We can say with certainty that it first appeared in 1971. The reason that we can say this with such certainty is that prior to 1971 UK household insurance policies did not provide cover against subsidence.
In 1971 insurance companies started to add subsidence cover to household insurance policies. This coincided with the rise in home ownership and was, to some extent, driven by mortgage lenders who saw this as an additional safeguard to their investment. Insurance companies at that time saw it very much as a ‘no cost’ add-on, believing that it exposed them to little, if any, additional risk!
That changed after the drought in the Summer of 1976 when shrinkage of clay subsoil resulted in a considerable number of claims being submitted to insurers. At that time the policy of many insurers was to carry out quite major repairs and underpinning to properties that displayed even relatively minor damage. This obviously resulted in substantial expenditure in an area that insurers had previously thought would expose them to very little risk.
This then created a situation where insurers became very reluctant to offer cover to new policyholders on properties that had shown any signs of previous movement, as they had become in today’s parlance ‘risk adverse’. As mortgage lenders also wished to protect their position, they would be equally reluctant to lend on a property where it might be difficult, if not impossible, to obtain insurance against subsidence.
These concerns were in turn passed onto Valuation Surveyors who, mindful of their professional indemnity insurance, tended to report even minor cracks as potential subsidence issues. As you can see, we have gone in a few years from a situation where no one worried too much about a few cracks, to a situation where everyone became paranoid about even a hairline crack in case it would render their property uninsurable and hence unsalable.
The Present Day
If we accept that subsidence insurance is here to stay, then we have to accept that subsidence will continue to exist as a concept and people will want to claim against their insurance if they think they have subsidence.
So how do we deal with it in the real world? It is probably easiest to explain this by looking at how a potential claim for subsidence is dealt with. A claim may start for a number of reasons, but it will usually begin when a householder becomes concerned about cracks in their property. This could be when they start redecorating and find cracks that they had not really noticed before or when they put their house on the market and the aforementioned ‘Valuation Surveyor’ reports evidence of crack damage or previous movement.
On receiving notice of a potential claim insurers will usually appoint a Loss Adjuster to investigate on their behalf. The Loss Adjuster will visit the property and prepare a report for the insurers recommending what further action needs to be taken.
The Loss Adjuster will report any evidence of damage and cracking and also the history reported to them by the policyholder. It is very difficult to arrive at any firm conclusions from one visit, particularly if the damage is relatively slight, so it will be quite normal for the Loss Adjuster to recommend that further investigations are carried out.
The investigations will normally be quite comprehensive (and expensive). Typically the investigations would involve establishing the depth of the foundations, recording the type of subsoil, recording any trees or major shrubs on the site and analysing soil samples and any roots recovered from the investigations.
It would also normally be recommended that the cracks are monitored. This involves taking detailed measurements at set periods to establish whether the cracks are opening, closing or stabilising. It may also be suggested that a ‘level monitoring’ exercise is carried out. This would establish whether the building is rising, falling or staying in the same position relative to a fixed datum point.
With modern measuring equipment crack and level monitoring is carried out to a very fine degree and we are often talking about movements of a fraction of a millimetre.
This level of investigation takes considerable period of time (often many months) and the costs can run into several thousand pounds. In my view, this level of investigation, to some extent, puts in everyone’s mind the view that this must be a serious problem, otherwise why would the insurance company spend so much money on investigating it.
The simple answer is that there isn’t really much alternative under the present system. The only real alternative would be for insurers to say that they will just repair the cracks without investigating the problem. Realistically, this is probably not going to be acceptable to anyone, but the fact remains that the cost of full investigations will in many cases outweigh the cost of the eventual repairs.
So what happens when the investigations are completed? Quite often the investigations will conclude that the property has been affected by minor subsidence due to clay shrinkage, but that monitoring has shown the property to have stabilised and that only minor crack repairs are required.
In some cases monitoring will show that minor movements are continuing. In these cases insurers will often look to take some action to bring the claim to a conclusion. In many cases the action will be to remove trees or shrubs that are considered to be a contributory factor. If these are on the subject property the insurance company will simply insist that they are removed, as the policyholder is under an obligation to take action to mitigate any potential loss.
If the trees and shrubs are on adjoining land, the insurers will have to prove that the trees are implicated and request the adjoining landowner to remove the vegetation that is deemed to be contributing to the problem. This request is often accompanied by the threat of action to recover any losses if the adjoining owner does not remove the trees or shrubs.
What we do have to bear in mind is that removal of vegetation is always somewhat experimental. There is no guarantee that removing trees or shrubs will have the desired effect and even if the property does stabilise after tree removal there is no way of proving that the building would not have stabilised of its own accord anyway.
When looking at clay subsidence there are so many variable issues, such as the type of clay, the depth of foundations, climatic conditions, underground water sources and slope of site that it is never going to be possible to say conclusively that removal of vegetation alone will cure the problem.
Insurance companies are businesses that are, quite understandably, looking to thrive and make a profit. Obviously, they will look to minimise the amount that they have to pay out under any particular claim. To a large extent this is why the removal of vegetation that may be implicated is often suggested, as it may cure the problem and has no cost implications for insurers. The policyholder will normally be responsible for the cost of removing any trees or shrubs on their own land and adjoining owners will also be responsible for the costs of removing trees on their land.
The advantage that insurance companies have is that it is not within their remit to look at the wider ecological issues of tree removal and they have only to consider their interests and those of their shareholders.
In the next part of this post we look more closely at what subsidence is and some of the contributory factors.