At The Commercial Law Practice we pride ourselves on our friendly, open approach and effective communication is a vital part of how we work. When you consider that a typical property conveyance may involve the purchaser, seller, estate agent, bank or building society, surveyor and two firms of solicitors then it’s possible for things to go wrong unless everyone understands the same meaning for any words or phrases that may be used. For example, two words, ‘subsidence’ and ‘settlement’, are commonly used in property reports to describe cracking in the walls. However, particularly with reference to property insurance in England and Wales, subsidence and settlement are two different things and the words cannot be used interchangeably. Technically, cracking may be the result of either subsidence or settlement (but not necessarily either of them!). Please read on, we’ll explain the differences and why they may be important to you, below.
Definitions
These are the accepted definitions of the important terms
Settlement
Downward movement of the building (or part of the building ) as a result of compression of the ground beneath the building by the weight of the building. Occasionally it can also be ”self-weight” rather than building weight, in this case the weight of material used to make-up the site compacts the soil beneath it (see definition of “The Site”, below)
Subsidence
Downward movement of the site or part of the site on which the buildings stand, other than by settlement.
The site
“The site” is not usually defined in insurance policies. If there is no other specific policy wording then the following definition is normally accepted.
“The Site” is the prepared ground, including made-up ground, on which the building is erected after the foundation trenches have been dug and immediately prior to the first step in the actual process of building.
So, a good way of understanding the difference between settlement and subsidence is to ask yourself ‘Would the downwards movement have occurred without the load from the building being applied?’ If the answer is yes, downward movement would have occurred without the weight of the building, then the movement, and hence any associated damage, is likely to be the result of subsidence rather than settlement.
Possible causes of Subsidence
- Clay shrinkage
- Water e.g. burst or leaking pipe
- Sinkhole or other solution feature
- Mining
- Decomposing organic matter
How does this affect me ?
Well, most household insurance policies, and some commercial property insurance policies, cover loss or damage caused by subsidence, heave and landslip. They do not usually cover any loss or damage caused by settlement, wall tie failure, thermal movement, lintel failure, roof spread or any of the other possible causes of movement and cracking. This is why it’s crucially important to correctly diagnose and fully understand the cause of any damage that may be reported.
Also, please be aware that, typically, Insurers only cover the cost of repairing damage or loss as a result of subsidence. They do not usually cover the cost of preventing further subsidence.
This means the cost of repairing damage (e.g.cracks in walls) is usually covered, but the cost of stopping the building from moving in the future is not covered. This is one of the situations when disputes with Insurers can arise. For example, the owner expects to have the entire property underpinned but the Insurer insists that only partial underpinning or less extensive (and less expensive) remedial measures will suffice.
How we can help you
Our property team at The Commercial Law Practice are experienced in all aspects of conveyancing and if you are buying or selling property that may be affected by subsidence issues or has historically been impacted by subsidence then we have access to the expertise that may be able to help you achieve a successful transaction. Please contact Nicola Pugsley (T: 01305 55014 E: np@thecommerciallawpractice.com) for more details or to make an appointment to meet us.
