When insuring, protect your pocket as well as your home

How to avoid building policy criteria leaving you with big repair bills

Despite many Jubilee street parties being washed out last weekend, parts of the UK are still officially in drought and with warmer weather expected, subsidence is a big concern for homeowners. Even worse, insurers can use tricky get-out clauses to avoid paying for claims, so you could find yourself footing the entire repair bill.

Tell-tale cracks are the first sign of trouble. Drying soil and falling water levels cause the ground to shift, creating cracks in walls, floors and ceilings. Small cracks below 5mm wide are not usually a concern and can be fixed with routine decoration, but if you can slot in a 10p piece or doors and windows don't close evenly it's time to call the insurers.

They will investigate the cause of damage and arrange for repair work, but, be warned, you will have to cover the bulk of any repairs yourself as standard subsidence excesses (the first part of the claim you pay yourself) are a hefty £1,000. Even worse they could refuse to pay out at all. Typical exclusions include damage caused by an uninsured event such as settlement, thermal movement, roof spread or wall-tie failure, sea or river erosion and faulty design or workmanship. Damage to outdoor pools, tennis courts, patios, terraces, footpaths and garden walls, gates and fences may also be excluded.

"It is essential consumers read the exclusions applicable for subsidence along with the 'definitions' of the policy," says Mike Powell, the head of general insurance at Defaqto. "If you are not sure about what is covered, contact your insurer for clarification."

With any buildings claim, the message is that insurers are finding frustrating ways to avoid paying up, as the writers Will Self and Deborah Orr recently found out. The couple's insurer Axa is digging in its heels after the parapet fell from the roof of their Victorian home in Stockwell, London a few weeks ago and has now refused to pay out, citing "wear and tear".

All policies have exclusions for terrorism and "acts of God", such as earthquakes, but there are several common misconceptions as to what is and isn't covered. According to insurers Legal & General's recent Home Care and Repair report, a fifth of people mistakenly think they can claim to check or replace roofing, 12 per cent wrongly believe they can claim for damp on an interior wall and 16 per cent think they can claim to fix a leaking pipe, which is only likely to be covered if there have been freezing conditions.

"In our experience, when it comes to customers making a claim, they aren't as clear on the detail as they thought. Unfortunately, this lack of understanding means that insurers do receive a number of claims that are not valid," says Mark Holweger of L&G, which has a handy guide at interactivehouse.legalandgeneral.com to help customers identify insurance terms used and the cover available.

Storms can be another grey area – so while you should be covered for lightning and storm damage, insurers may have different definitions; for example, they may require winds to exceed 55mph, so damage caused by continual bad weather is excluded.

Absent landlords could also have a fight on their hands if insurers play the "wear and tear" card – as Shannon Murray, a model and disability rights campaigner, discovered when her insurers refused a claim for a leak under the bath in an apartment she lets out in Manchester, which led to the bathroom having to be refitted.

"My letting agent assumed it would be covered by the buildings insurance, but when I put in a claim the property management company said the insurers rejected it because the leak must have been ongoing for years and should have been detected earlier," says Shannon.

She pays an annual maintenance charge which includes insurance, but felt she wasn't in a position to challenge the refusal. "As a landlord, I felt I needed to get the work done as soon as possible so the tenant didn't have issues. But, if I had lived in the flat, I probably would have tried to challenge it."

If you do want to contest a decision you can take your case to the Financial Ombudsman Service (FOS). One woman was told her claim was invalid because winds had not reached 55mph, but the FOS said that damage can still occur at lower wind speeds and told the insurer to deal with the claim.

However, the best way to protect your pocket is to find out exactly what is and isn't covered before taking out a policy. Building insurance covers the structure and fittings, which may include domestic outbuildings, patios, driveways and paths, but fences and gateposts are not always covered. There is quite often a list of optional extras, so expect to pay considerably more if you want the most comprehensive policy possible.

Crucially, remember insurers require you to keep your home in a good state of repair which means fixing problems as soon as possible (repairing dislodged roof tiles straight away) and making regular checks to identify problems early. The only way to protect against ongoing bad weather is to maintain your roof, keep gutters clear, check roof tiles, insulate pipes and clear any debris from chimneys. If you don't do these things, any subsequent claim could be refused.

There are also practical ways you can minimise subsidence risk. Again, this starts with regular checks to detect damage early on. It may help to talk to a tree surgeon about removing trees that could be taking too much moisture from the ground. And, before planting trees or large shrubs, check the recommended distances from buildings on the Association of British Insurers' website.

Note that your home won't be covered if it is left empty for more than 60 consecutive days, although you may be able to arrange a short-term agreement. Inaccurate details on your application form can also be a problem, says Julie Fisher, the head of home insurance at MoneySupermarket.com.

"When applying for home insurance it's vital all the details you enter are accurate to limit the chances of a claim being refused." She added that people often get caught out by undervaluing their home's contents or by forgetting to update their policy. If anything proves to be inaccurate the insurer will have every right to refuse your claim.

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