Sinking prospects of contents cover

HOUSEHOLDERS whose homes are affected by subsidence may find it virtually impossible to obtain cover for the contents of their homes, even though subsidence is a structural problem normally covered by buildings insurance.

Steve and Ella Cleary bought a two-bedroom flat in south London a year ago. After they moved in they discovered their building was affected by subsidence. A claim has been lodged with Sun Alliance, the company that provided the buildings insurance arranged through the freeholder.

The Clearys tried to shop around for contents insurance and tried a number of companies and agents, including AA Insurance, Legal & General and Direct Line.

'They all said they could not insure us because of the subsidence,' said a mystified Mr Cleary. He could not see why a claim affecting his buildings insurance should alarm insurers being asked to cover him against damage to furnishings and decorations inside the house.

One company said it was worried about paying out on the contents policy if the couple moved out of the house while the subsidence work was done.

Another said it had paid out on subsidence-linked contents claims in the past, but it proved so difficult extracting money from the householder's buildings insurers that its attitude had hardened.

Mr Cleary said: 'We are worried about fire and theft and would be prepared to have cover that excluded subsidence claims.

'All the application forms you are asked to fill out ask if there is a history of subsidence in the area. Just about every home in London would have to answer 'yes' to that.'

Legal & General said the problem with Mr Cleary's property was not just the subsidence risk but that it was in an area of London that the company considered high- risk for a variety of other reasons.

Direct Line confirmed that it would not want to take the house on because of the risk that it would have to pay out for the costs of moving out of the home temporarily. But the company said this did not mean a blanket ban on homes in subsidence- prone areas.

AA Insurance, which acts as an agent arranging policies through a number of insurers, said companies were wary about all aspects of subsidence. 'They are very nervous, perhaps more nervous than they should be,' said Peter Farmer, manager of broking and development.

Sun Alliance said it was surprised that other insurers were so worried about the effect of subsidence on a contents policy.

Steve Turner, who oversees household policies at Sun Alliance, said that since the Clearys' buildings cover was with the company, it would hope to provide contents cover as well. He did not think subsidence posed a huge threat to a contents policy.

The company would also consider providing a contents policy that excluded subsidence.