What If You Can’t Get Buildings Insurance?
Surveyors doing mortgage valuation inspections are normally asked to comment in the lender’s report on any matters of concern, particularly where there could be implications for arranging buildings insurance.
This can have serious repercussions because unless you can insure the property no lender will touch it with a barge pole.
Probably top of the ‘worry list’ is structural movement attributable to subsidence. Where a property has suffered from subsidence in the past and remedial works in the form of underpinning have been carried out to stabilise the structure, you would imagine this would no longer be an issue. Unfortunately properties that have been underpinned often carry an indelible stigma that can lead to possible insurance problems.
Insurers rate postcode areas according to the likely risk of subsidence – which includes most of southern England with its shrinkable clay subsoils. Subsidence became the bête noire of the insurance industry after a tsunami of insurance claims as buildings cracked and subsided following the long hot summers of the mid-1970s.
But this was before something even scarier became a major issue. For insurers, flooding is the new subsidence. Postcode areas are now also weighted to reflect the risk of flooding, and properties built on flood plains can be more expensive to insure.
Thankfully, even when all seems lost, the solution could be staring you in the face. The normal advice in such situations is to take over the existing buildings policy from the current owner. However, buyers may want to negotiate a reduction in the purchase price as compensation for paying more expensive insurance premiums over future years.
Our next blog – coming soon …….
Reasons property deals fall through: The lender insists you get a medical report
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