Insurance covering cracking neighbours walls?

[happyfrogger]

We are undertaking a basement dig. We are selecting a Structural Engineer and have a basement contractor lined up, each of whom have their own insurance covering their own quality of work / negligence etc. Neither of them will insure against 'settlement cracks'.

1. How can a settlement crack reasonably be defined? I don't want to risk being in a dispute over something subjective where one party thinks its a crevice due to poor construction, and another thinks it's plain unlucky and life happens!

1. What if the above happens to my neighbours property? Even if just a hairline crack - will a regular homeowner's insurance policy cover settlement cracks that impact my neighbours property, that may not be expensive, but could cost me the redecoration of my neighbour's house.

Any experience on this or how to source the most appropriate insurance to 'fill the gaps' between regular homeowner buildings insurance and the engineer/basement insurance policy much appreciated.

Until giving up the insurance world which I did for about a thousand years, what I would suggest you do is inform your buildings insurers that you are having work carried out on your home and that the engineers and/or contractors you have engaged have all the necessary liability and other insurances in place. If during the work being carried out any damage is done to your house by the guys working for you, the easiest way is for you to claim from your own buildings insurers and for them to discuss recovery ( for settling your claim ) with their liability insurers. Likewise, if any damage is caused to your neighbour's property, he/she can claim from their own building insurers and those insurers contact the liability insurers for reimbursement

Won't you need to hire a party wall surveyor for your neighbours who will decide if any cracks are your liability? I'm probably being naive, but I don't understand why your builders wouldn't cover this if it's backed up by an expert opinion.

Thanks both. Yes, we have a party wall surveyor engaged. Good point - I will ask him for his thoughts on this. The building is also Freehold, and the Freeholder insures the whole building (and incidentally owns the upstairs property, which would probably be the one most likely to suffer any ill consequence). So we don't even own that policy.

The contractor expressly state in their contract that settlement cracks are pretty much 'one of those things' and they will not cover for it - buildings move, such is life they say.

I will have a hunt around to see if there is such a thing as buildings work insurance that could bridge this gap - Clare - do you know of such a thing?

Thanks

Happy

My suggestions in my first reply were based on the understanding that you owned the property as you were speaking about a basement dig. What you now say about the Freeholder insuring the whole building strikes me as you paying part of the building insurance via a management fee and you arranging your own contents insurance. So we can provide you with our best suggestions , please could you let us know exactly what the situation is with regards the property. What is the basement dig for and is the Freeholder ok with you carrying the work you want doing ?

Both correct - we are purchasing a ground floor flat leasehold. The Freeholder insures the whole building (which is the ground floor and a first floor flat). The Freeholder has buildings insurance and we would obtain contents insurance. We have exactly this situation in our current property. However, should our basement dig cause settlement cracks in the upstairs flat, I wonder if that buildings insurance would cover it, given it being an after effect of the dig.

The Freeholder is very happy with us doing the dig, we are paying him a vast sum for the pleasure as its creating more living space in his building effectively.

I guess I'm curious if a neighbour (also next door neighbours for that matter) don't want to claim on their buildings insurance because they want us to pay / or otherwise seek to be reimbursed via our insurers - would our (our freeholders) buildings insurance then cover next doors cracked walls?

Happy

Thanks for this extra information. As it seems that your solicitor is processing the purchase of the ground floor flat for you I would suggest you get everything in writing with regards the freeholder being ok with you to carry out the work for which you say you are paying him a vast sum of money. If you are on good terms with him/her do you have their full details and those of the building insurers ? Is the freeholder leaving it to you to notify the building insurers of the proposed work or has he/she done so? The work is going to effect the person/people living in the first floor flat so have you spoken to them or has the freeholder done that? If it is your intention to take out contents insurance ensure that it is also includes a section to do with legal liability to the public, which will cover you in the event that any damage is caused to the first floor flat or that of your neighbour's property.

Indeed - we are doing this. A legal agreement with the Freeholder wrt to price and details of when/how the work will be done and 'land' paid for is a pre-requisite of the sale. I have asked for the details of the Freeholder's insurer as hopefully a conversation with that insurer will uncover the next steps.

I'm not sure if the Freeholder expects us to notify the insurer or whether he will - good question will add to my to-do list!

Yes, we would take out contents insurance although we won't be moving in until all building work is complete.

Thanks for your help, Clare.

Happy

You'll welcome, hope it all goes ok for you

Do make sure you get the situation with the freehold buildings insurance sorted! When we renovated our house (side-return extension and whole house renovation) our insurers would not cover the property for the period of the renovation (any existing cover would have been invalidated) and we had to buy (more expensive) specialist insurance from a specialist provider. From reading that policy I doubt very much whether cracks as a result of the works would be covered by any insurance - but perhaps you could buy a specialist policy for it?

We dealt with possibility of cracking/damaging neighbours through party wall surveys (one surveyor jointly appointed to keep costs down) which included a photo inventory.