Dear All

I would greatly appreciate your opinion in my insurance dispute.

We notified our insurer of believed subsidence post exchange of contract.

The purchaser did not complete the sale of our home but we completed on the sale of the new home we were moving to.

Our insurer investigated & repudiated our claim stating “During my own visit I could not detect any recent subsidence damage even accompanied by yourself using a dumpy level”

Long storey short after 5 years & 10 months from commencement of the subsidence our insurer has accepted 196mm of subsidence across the entirety of our home & that at minimum half the property requires demolition.

Our property is classified as dangerous & Category 5 worse case of structural damage.

Once our insurer accepted subsidence liability we asked for the another claim.

The relevant clause within our Insurance policy states:

“Where you are selling your home we will pay for loss or damage arising from any cause listed in this section during the period between exchange of contracts and completion date to any purchaser of your home. Our liability for your home will end when your insurable interest in the home ends, which is normally when you vacate the home following completion and you hand over the keys to the buyer.”

The Financial Ombudsman Service (FOS) believe that the average person test should be engaged to this coverage.

The Financial Ombudsman believes this means:

“We must also consider the reasonable person test i.e. how would an average person read and understand the statement. In this instance I believe an average person would assume the following; the losses or damage referred to are limited to those caused to the building by an insured peril. Also, I believe the average person would understand the statement, “the period between exchange of contracts and completion date to any purchaser of your home”, to mean the normal length of time this process takes and if a purchaser pulls out of the sale the period then stops and the policy reverts to standard cover, not a totally unlimited time until a new buyer is found.”

The opinion I wish to ask is what the open public insurance purchasers believe/understand as to this policy clause!

“Where you are selling your home we will pay for loss or damage arising from any cause listed in this section during the period between exchange of contracts and completion date to any purchaser of your home.

DO YOU UNDERSTAND THIS AS THE ORIGIONAL PROPOSED PURCHASER OR ANY PURCHASER.

Our belief is that as long as we the seller has retained an insurable interest in our home we are covered for any loss as there are no exclusions until a new purchaser is found. We have even offered the property to our insurer who does’t want it.

We believe this is important in a buildings insurance policy if this was not the case and there is an occurrence of physical damage between the times of exchange and completion which induced a buyer not to complete or to delay completion and payment, the Sellers would suffer loss that might prove irrecoverable.

SECONDLY, when does the insurance companies liability end?

"Our liability for your home will end when your insurable interest in the home ends, which is normally when you vacate the home following completion and you hand over the keys to the buyer.”

IS IT AS IT SAYS ON THE BOX OR as the Ombudsman puts it “the normal length of time this process takes and if a purchaser pulls out of the sale the period then stops”.

Thank you in advance for your time & comments.

My understanding is that this cover between exchange and completion for loss and damage caused by the insured perils, is to protect the buyer for this period. Which is why it says that their (Insurers) liability ends when you have no interest in the property usually completion. Because when the buyers have all the liability on completion their Buildings Insurance will take on the full risk.

If the completion never takes place then this specific insurance clause will stop at the point the contract is stopped, which will be the date on relevant documents confirming the sale is not proceeding.

There is also the issue of double insurance, as usually the buyer is required to arrange Building Insurance from exchange of contracts. See this article

http://www.shlegal.com/knowledge/publications/06_10_The_perils_of_double_insurance_in_a_property_transaction

What are you actually trying to claim for under this specific insurance clause ?

Dear Sir

I would highlight the same case:

http://www.bailii.org/ew/cases/EWHC/Comm/2010/773.html

Double insurance is not an issue, as the sale contract covered that the owner would keep the property insured. Insurance company was aware of this.

Due to the insurance companies repudiation of a valid claim & upholding the repudiation while internally admitting liability (I have this in writing from them), means the insured has had to pay 2 mortgages for the duration.

The insured has had to pay experts to have the invalid repudiation overturned. This is a loss.

During the 5 year & 10 month fight to get the insurance company to admit liability the property market has taken a bit of a down turn! Hence the property is worth a fraction of its original value. This is a loss.

Plus all the interest.

It would seem that insurance is totally pointless.

The hold harmless principle seems to not exist!

Think this will end up in court, as the FOS can be useless in such cases. It would not surprise me if the FOS agreed with Insurers that this cover was purely about damage to the property and not the type of losses that you are seeking. The claim you are wanting to make is a legal one and not one that Insurers would consider under the normal terms of the insurance.

Would have thought that a court claim would be quite straightfoward. i.e Insurers dragged out an Insurance claim for over 5 years that was relatively straightforward and as a direct result I suffered these losses.

Be careful about statute of limitations, as to the date by which you must start any court proceedings, being that the cause of the dispute started 5yrs 10mths ago. Get urgent advice and if you need to get a court claim started.

That is the problem.

Is the FOS really independent?

they dragged this out for so long it is over 6 years now.

Does a FOS ruling rest the clock?

That is the problem.

Is the FOS really independent?

they dragged this out for so long it is over 6 years now.

 

Does a FOS ruling rest the clock?

No I don't think the FOS process rests the clock, but if you are going down the court route you need to do this asap. There could well be arguments as to the date that the statute barred principle applies from, that means that it is still within the 6 year period. This is where you need a Solicitor.

It's not clear from your post but I assume you completed on the property you were buying and retained the old property as the sale fell through.

How long ago was this?

Did you transfer the Insurance to the new property and if so what did you do to cover the old property?

"The purchaser did not complete the sale of our home but we completed on the sale of the new home we were moving to."

Yes we had to keep the old subsiding property. We still have it.

Hence why we ask for the opinion on CL 21.

“Where you are selling your home we will pay for loss or damage arising from any cause listed in this section during the period between exchange of contracts and completion date to any purchaser of your home. Our liability for your home will end when your insurable interest in the home ends, which is normally when you vacate the home following completion and you hand over the keys to the buyer.”

In terms of statute of limitations I think because the Insurers appear to have admitted liability within 6 years from the date of the cause of any action, that you are ok in still taking this to court.

If I were in your shoes, armed with all the information, I would employ a Solicitor to start a court claim against the Insurers. But obviously you must talk to a Solicitor about how any fees would be handled. I can't see a no win no fee being possible, but perhaps some form of fixed fee arrangement would be best.

Obviously once you issue a court claim, the FOS will withdraw from dealing with your complaint, but I am guessing that you have no faith in continuing with the FOS anyway.