Subsidence and ground heave
Heave occurs when the ground beneath the foundations swells and rises, creating pressure on the underside of the foundations; and is the very opposite of subsidence, in which the ground shrinks and the foundations move vertically downward.
Our Chartered Surveyor client lived in an architect designed house, built off a piled raft foundation, which began to show signs of movement 22 years after it had been built. Investigations by the insurers confirmed there had been subsidence to a side addition which had been constructed after the house, but before our client’s ownership. The insurers refused the claim on the grounds of an exclusion which relieved them of liability for any damage due to defective design and/or construction, because our client had no documents to prove the addition had been built with planning consent and complied with building regulations. At this point we were instructed and pointed out to the insurer the legal position was that if they wished to rely upon an exclusion the onus of proof shifted back to them. They approached the local authority in anticipation the records would show a failure by the previous owner to have complied with building legislation. They were rather taken aback when it transpired the local authority had in fact lost all the historic documentation in relation to not just our client’s home, but the whole private road in which it stood. Reluctantly the insurers accepted the claim and paid for new piling to the side addition and for crack repairs and redecoration to the other affected areas.
Four years from the first claim, but only two since completion of repairs, the house started moving again, and although the damage appeared similar in location to the earlier movement, it seemed to us it might on this occasion have been caused by ground heave. The insurer’s representative said on his first visit that he could not see evidence of either subsidence or heave, but agreed to some investigations and monitoring. These carried on for some considerable time whilst arguments went back and forth as to causation, remedy and liability.
We eventually reached agreement that the damage had been triggered by ground heave, but it came as no surprise when the insurers once again argued defective design and/or construction. This time their reliance on the exclusion was based upon the exposure of some of the piles which showed them to have defects, though it was not clear whether some of those defects had been from the original construction, or as a result of the ground movement. One alleged construction defect was the absence of anti-heave precautions to the piling, but we rebutted this by pointing out that at the time of construction there were no building regulations requiring anti-heave measures.
At one point the insurer agreed to pay for installing anti-heave measures, but then changed their mind and said our client would have to pay for them, and if he did not they would not continue to insure him for subsidence and heave. We complained and took the claim to the Financial Ombudsman Service (FOS) who determined that it was unreasonable for the insurer to ask their policyholder to effectively become his own insurer, and pay for repairs in order to remain insured.
After protracted negotiations the insurer eventually agreed to pay £160,000 for repairs and temporary accommodation for our client.
Onus of proof can sometimes shift to the insurer and not just the claimant.
Subsidence in block of flats
The freeholder and lessees of this purpose built block of 20 flats in North London had been struggling with loss adjusters for 3 years when we were asked to act.
The adjusters had concluded that the property could be stabilised by incorporating a root barrier between the front of the block and the trees on the local authority footpath, about 6 metres away. They also said that the cost of repairing and redecorating the cracks to the building should be no more than £10,000 – and as that was the policy excess there was nothing for the insurer to pay!
We carried out a thorough review of the case history, checked the scope of policy cover, formulated the technical and contractual arguments, and consulted with engineers and surveyors to determine the appropriate remedial scheme. When we could not persuade the loss adjusters as to the merits of our case (and the error of their ways) we presented a comprehensive report with detailed arguments to the insurance company’s Chief Executive.
The claim was settled by amicable negotiation direct with a senior claims manager of the insurer for over £323,000 and included a scheme of underpinning, repairs and redecoration in every flat, the common parts and the exterior. The insurers also paid for temporary re-housing for some residents, loss of rent for others, and removals and storage.
If you are properly insured you have a right to expect the correct solution to a subsidence problem.
Subsidence - terrace of Victorian houses converted to flats
This Victorian terrace in the heart of Hampstead comprised 14 leasehold flats and duplex apartments, the ownership of which was complicated by multiple freeholders and lessees.
Fortunately, the head lease of all had in the past been owned by one company, and the insurance had been maintained under one policy. The claim was fraught with technical contention, with the insurers bringing in the country’s leading experts to rebut our assertions that underpinning was the appropriate solution.
It took some time, and persuasion, but they finally bowed to our technical and contractual arguments and paid out £562,000 for underpinning and repairs. The clients were also able to take advantage of the opportunity to cost-effectively carry out their own roof repairs and general maintenance.
With her house suffering from subsidence in exactly the same places as had happened 20 years earlier, and despite a previous partial scheme of underpinning and continuous insurance with the same company over all that time, our retired government officer client, and her highly experienced structural engineer, could not persuade the insurer’s representative that they should on this occasion put everything right so that it did not happen again. By the time she came to us this second claim had already been running for five years without the remotest prospect of resolution.
We recommended her engineer prepare a remedial scheme based upon his expert determination of what needed doing, which in this case included underpinning, and to then obtain competitive tenders for the work so we could quantify the claim. We presented the results to the insurer’s representative, with the lowest price being some £91,000. They came back saying underpinning wasn’t necessary and offered the princely sum of £5,000 to deal with all the repairs.
We complained to the insurer, who stood by their representative and the offer they had made. Confident that an impartial engineer would support our case, we agreed to an independent report, which indeed confirmed the validity of our arguments. With a contribution to her previous costs the insurers upped the offer by 1800% and settled at £94,000.
Sadly, we sometimes encounter unscrupulous firms representing insurance companies, who try to dupe not just the policyholders, but even the insurers they work for.
Even being a well-known TV and film director didn’t help this client when he claimed for the cracks and movement suffered at his four-storey North London home.
Loss adjusters acting for his insurers blamed trees in a neighbouring garden and on the footpath, but the evidence was not strong enough to persuade third parties to remove the offending trees. Despite the property continuing to move, and by their own admission at risk of further movement whilst the trees remained, the adjusters were only prepared to patch fill the cracks and decorate.
Three years into the claim we were appointed to find a technically efficacious repair solution, but at a cost acceptable to the insurers. We arranged further site investigations and a period of precise level monitoring to more accurately establish the parts of the building needing structural intervention. With the assistance of the client’s engineer we proposed a partial underpinning scheme with comprehensive crack repairs supported by some steelwork; and head to toe plaster repairs and redecoration.
The insurers accepted our proposals, the clients moved to alternative accommodation whilst the works were carried out, and the claim was settled for a whisper under £200,000.
This was one storyline our director client could have done without.
This characterful 19th Century large end of terrace property sat in a quiet Kentish Town cul-de-sac, dominated by a very mature Sycamore tree whose roots had desiccated the sub-soil causing major subsidence to the foundations.
Our retired client, Mr H, had only moved in a year or so before seeing huge cracks appearing in parts of the property. The surveyor who did his pre-purchase building survey recommended he appoint us, and after we notified the claim it came to light that the property had previously suffered subsidence which had not been disclosed to the insurer.
The previous owner had not mentioned a subsidence claim on enquiries before contract, but once Mr H’s claim had gone in, the insurer checked their records and discovered they had insured the property several years earlier, and had in fact paid out for subsidence damage. It took some time, and a not insignificant amount of documentary evidence, to persuade the insurer that our client knew absolutely nothing of the previous damage, but eventually they accepted the veracity of his statements, and agreed to meet the claim.
The received wisdom for dealing with tree-related subsidence damage is that if you remove the cause of the problem, the offending tree or trees, then the ground will re-hydrate, recover and the property will stabilise, and the need for structural intervention by way of underpinning may be avoided. The problem with received wisdoms is that they have flaws, and a one-size-fits-all solution is seldom applicable. In this case, removing the Sycamore would indeed induce ground recovery, but because of its size and root spread, the arboricultural advice was that removing the tree would probably result in heave. In effect substituting one cause of damage for another.
The council who owned the tree wanted to remove it, thereby absolving itself of liability for any damage it had caused, and the loss adjuster wanted it removed because he thought that would avoid underpinning; and by his reckoning even if it did cause heave, that could be dealt with as another claim some time down the line. The residents in the street regarded the tree as having huge amenity value, and lobbied the council to keep it. We did not either think it fair to Mr H that he should not have a durable and technically efficacious solution. We approached the loss adjuster’s national engineering manager and he agreed to review the case. We met on site with him and Mr H’s engineer, and he was not only persuaded that the tree should remain, but that the whole house and rear extension should have piled raft underpinning to ensure future stability.
Schemes were drawn up and tendered, Mr H moved out for a year while the works were done, and the insurers paid over £600,000 to settle the claim.
Loss adjusters are not as bad as they are sometimes painted. Whilst some see it as their bounden duty to cut down claims, there are many who are fair, reasonable and honourable.