Cracks emerge in buildings cover

Insurers fear increased weather-damage claims as our climate changes, writes Tom Tickell

New rights and protections for leaseholders have been proposed by the Financial Conduct Authority, to improve the transparency of the multi-occupancy leasehold buildings insurance market (Joe Giddens/PA) (PA Archive)

On 15 October 1987 - 10 years ago on Wednesday - Michael Fish, the TV weatherman, had words of comfort for Britain's television viewers. "A lady rang to say she has heard a hurricane is on its way," he announced. "Well, don't worry, there isn't."

A few hours later the worst storm in 300 years struck the South of England, leaving thousands of trees uprooted, cars overturned and roofs smashed or badly damaged. Many roads were impassable, and telephone and power lines went down.

The Great Storm may have been a dramatic one-off disaster, but certainly Britain's weather seems to be changing. Climatologists may argue over whether storms are more ferocious than they used to be, but the South- east certainly seems to be drier and hotter and to have more dramatic weather. That has had a knock-on effect on buildings insurance claims, particularly for subsidence.

The change seems to have gathered pace this year, with one of the 25 warmest summers since the days of Oliver Cromwell. Rainfall in September was only 30 per cent of the normal level. Another long dry winter is what insurers are praying to escape, as it could create another wave of claims for structural damage to buildings from subsidence.

Subsidence plagues many parts of London and the South-east, though if you draw a line from Bristol in the South-west to Hull, properties below it may be at some risk, depending on the soil. "Clay soil won't cause the problem on its own," says Tim Wilmshurst of Guardian Insurance. "But trees spreading their roots to suck up water can precipitate it. Full- sized oaks and sycamores can soak up several tons of water a day, though it's not just the giant trees which are a hazard. People planting rows of small pines and poplars can run into trouble."

Certainly insurers have toughened up in a number of ways. The premiums themselves may not have gone up that much. In some cases they will even be lower than 10 years ago, and rates are now much more geared to individual properties, reflecting not only the underlying geology of an area but also the chances of storm and flood damage. Higher risk properties are the losers in this increased rate differentiation. But whatever the rating of your property, you may now also have to pay the first pounds 1,000 rather than pounds 500 of any claim - the excess.

When you do claim insurers will send in loss adjusters whose job is to work out if subsidence is responsible, and to plan repairs. Most, but not all insurers pay for this investigation. Butthey may describe their job, loss adjusters work for the insurer and will be keen to keep costs down. Complete underpinning of houses hit by subsidence is much less common than it was, partly because it is so expensive.

In subsidence claims, loss adjusters may recommend a surveyor, but any policyholder wary of what is going to be a big claim will be better off getting his own surveyor. "Loss adjusters will often go for the surveyor they know, who will be relatively sympathetic to them," claims Malcolm Harvey of the Loss Recovery Group, a company that works for policyholders in complex claims.

Penalties for switching insurer are less than they were, however, and it is worth shopping around, particularly if you took out your policy through your mortgage lender. There may be an administration charge of up to pounds 25 for switching, but companies new to this market will in many cases pay this charge for you.

Telephone insurers such as Direct Line now sell buildings as well as contents cover. But they are acutely aware of the rising tide of claims and are choosier in deciding which properties to insure. Even so, Direct Line has had over 15 per cent more claims in the first nine months of this year than it did in the same period last year. A dry winter, like the last two, would almost certainly make matters worse next year.

What can you do to reduce the risk? One answer is to get professional advice on cutting back large trees. Another is to keep a weather eye out for cracks down the side of the house, particularly those larger than the width of a 10p coin. Reporting suspicions to insurers as early as possible can ensure that problems do not get worse.