Paul Hutchinson
Claims Leader, Marsh
Protecting your commercial property assets is fundamental to maintaining operational continuity and safeguarding your investment – a cornerstone of sound business practice. However, one often overlooked threat – figuratively and literally – that can cause substantial structural damage and disruption is subsidence. This ground movement phenomenon can compromise your building's structural integrity. And this can lead to costly repairs and complex insurance claims and challenges. The adjustment of a subsidence loss is also distinct from other first-party property damage losses. They can take time to resolve due to investigation and monitoring periods, which can create uncertainty for those affected. Having the right buildings insurance with a reliable buildings insurer is essential to manage this risk.
What is subsidence?
Subsidence occurs when the ground beneath a building sinks or shifts, causing downward movement and structural problems. This differs from heave, where the ground swells, or settlement, which is a gradual soil compression.
The most common causes of subsidence include:
- Shrinkable clay soil that contracts during prolonged dry spells when the ground loses moisture.
- Presence of made up ground.
- Thermal movement of soils.
- Tree roots drawing moisture from the soil.
- Nearby construction, drainage failures, or leaking pipes.
- Environmental influences such as drought, heavy rainfall, and invasive tree roots exacerbate ground movement.
- Human activities – such as nearby construction, drainage failures, or leaking pipes.
These factors can affect the property's foundations and can threaten the building’s structural integrity.
How to spot signs of subsidence
Common indicators of subsidence include:
- Subsidence cracks (often diagonal cracks) in walls.
- Cracks caused by movement around windows and doors, including windows sticking and lintel failure.
- Misaligned doors and windows.
- Uneven floors and changes in roof spread.
- Other signs such as if the building moves or the property sinks.
Most commonly, subsidence develops slowly over months or years, making the first sign easy to miss. But small changes can indicate something is wrong. Occasionally, in severe cases, it can manifest suddenly, for instance, where a sinkhole has formed and collapsed, or heavy rainfall or flooding has caused rapid soil collapse.
What to do if you think your property is affected by subsidence
As with all claims, it’s important to notify your current insurer promptly. They will ask you about your date of first knowledge of an issue. If you knew about an issue and didn’t act on it for a long time, insurers may rely on policy conditions to deny your claim, citing late notification and prejudice to their position as the damage hasn’t been mitigated. Furthermore, if signs of subsidence are overlooked for a period of time, the damage caused to your property may worsen, requiring more extensive remediation and resulting in higher costs. It’s better to err on the side of caution and have the insurers carry out their investigations into the damage to establish causation.
How are subsidence claims adjusted?
There are three key phases to a subsidence claim:
1. Investigation
When buildings insurers are notified, they will first assess what coverage is available for subsidence under your policy. Assuming there is coverage under your policy, insurers will instruct a loss adjuster or surveyor to inspect the property. They will undertake a visual inspection of the property and identify any visible damage. They will review the property’s history, soil type, proximity to trees and environmental factors.
The next step can involve surveys and testing. A full structural survey may be conducted to assess the building's weight and any damage to the property's foundations and other parts of the building. It may be that soil investigations are also undertaken to understand soil composition (commonly looking for clay), moisture content and stability. Monitoring devices (e.g. crack monitors) may also be installed at this stage to track movement over time.
The purpose of these investigations is to identify the cause of the subsidence. Whether it's subsidence caused by clay shrinkage, tree roots, drainage issues or human factors (e.g. construction or mining activity). Insurers also want to identify the type of ground movement, as other causes beyond subsidence may not be covered (e.g. heave or settlement). If during this phase, subsidence is identified as the cause and there are no applicable exclusions, insurers should confirm policy liability.
2. Mitigation and monitoring
This phase focuses on stabilising the property and preventing further damage while continuing to monitor ground movement. Adjusters, structural engineers and/or surveyors will likely visit the property periodically to track movement using data from the sensors.
Temporary repairs may be undertaken to shore up the property. This can include the installation of temporary supports or props, to stabilise the structure. Cracks might be filled or sealed to prevent further deterioration and water ingress.
In terms of activity outside or underneath the property, soil treatment can be undertaken to control moisture levels and reduce shrinkage/swelling. If trees are a factor, a tree surgeon may be needed to manage trees or remove them. Vegetation may also be removed or root barriers may be installed. It is best to avoid planting trees near foundations, and existing trees should be regularly pruned.
3. Repair or reinstatement
Once the ground is deemed to be stabilised, more permanent repairs can be made if needed. This can include:
- Underpinning - installing reinforcements under the building’s foundations.
- Structural repairs to walls, floors and other affected elements.
- In extreme cases, completely rebuilding damaged sections of the property.
Beyond the structural repairs, further costs may have been building up. Cosmetic repairs (painting, plastering etc.) will in many cases need to be undertaken and if the property has been uninhabitable throughout, or just during the repair, alternative accommodation costs can be incurred.
How long will the claims process take?
This is the most common question we get from clients around this type of claim. It’s natural to want the issue resolved quickly, particularly if it is causing business interruption or if it means tenants are unhappy. Unlike other first-party property claims, it’s often not obvious what the cause of the issue is, and it can take time to establish the extent and reason for damage. Investigations and monitoring can go on for months and sometimes years before there is certainty around the damage, its cause and the action required to remedy it. It can be a long road to finalisation of the claim and Marsh is on hand to advise you along the way.
Common exclusions and reasons for claims not being paid
- Some policies may exclude certain causes of subsidence, such as damage due to local mining activity, construction work or natural ground movement. Where this activity is known and disclosed at renewal, insurers may look to limit their exposure to subsidence given the heightened risk. It’s similar to how insurers approach insuring properties in areas susceptible to flood. They might choose not to insure them at all, or they may impose coverage restrictions and onerous terms.
- As referenced earlier, late notification of known issues is also a common reason for coverage declinatures as it prejudices their position. Early notification allows insurers to contain costs through early intervention – if they don’t know about it, their position can be prejudiced.
- If the cause is identified as settlement, this may be excluded. It’s considered a maintenance or design issue, rather than sudden and unforeseeable. In this situation, depending on the circumstances, there may be potential recourse options against those involved in the property’s construction or design.
- If the cause of the movement is identified as heave (upward movement of the ground), it is often excluded or coverage may be limited.
- Damage due to poor maintenance can cause insurers to deny coverage. If your property is within close proximity of trees, it’s important to have a tree maintenance and inspection regime in place. You need to be able to this as the paper trail can be key in the case of a claim.
Case study - Handling a disputed claim
The client, a property owner, submitted a subsidence claim in 2024 after identifying extensive cracking at their office. The claim was reported to the insurer, who had recently taken on the cover. Early investigations by the loss adjuster revealed historic subsidence damage from five years earlier caused by tree roots, which the client had not previously claimed for. The insurer declined the claim due to non-disclosure and because the damage predated the policy’s inception.
Further investigation with the client established that underpinning work had been carried out in 2021 to address the tree root issue, but the client had managed the repairs themselves and did not disclose this to the insurer, not realising it was related to subsidence.
A Marsh Claims Adviser advised the client to commission an independent survey to clarify the timeline and cause of the damage. The new survey identified a separate area of movement caused by construction traffic passing near the building, distinct from the previous subsidence.
Meetings with the client confirmed that the earlier issues were repaired and stable, and the recent movement was localised to the opposite side of the building, representing a new and separate insured event.
Using this evidence, the Claims Adviser successfully challenged the insurer’s repudiation, addressing concerns about causation and non-disclosure.
As a result, the insurer agreed to indemnify the client. Surveyors were appointed to evaluate repairs and manage the project, eventually bringing the claim to a successful conclusion.
The Claims Adviser’s proactive approach and problem-solving made a significant positive impact for the client, exemplifying high standards of service and achieving a successful outcome.
If your insurers are declining your claim, Marsh’s claims advocates can review the insurer’s decision to identify any opportunities to challenge the decision. Please discuss this with your Client Executive and claims contact.
Managing tenanted properties
Tenants and leaseholders can add a layer of complexity to subsidence claims. Housing Associations or those who run tenanted commercial property portfolios (or similar) must let tenants or leaseholders know about their obligations. They must report damage of all kinds to the housing association or freeholder, including what might look like innocuous cracking. The tenant or leaseholder will need to provide access to the property for the insurer’s appointed experts to get the claims process moving.
You may incur a loss of rent, revenue or profit because of the damage. In that case, your policy may include business interruption cover which could cover all or some of your loss. Marsh can assist with the process of quantifying your loss, presenting it to insurers and negotiating a favourable settlement. Ask your Client Executive or claims contact for further information on our Forensic Accounting and Claims Services (FACS) team and the Marsh Claims Enhance (MCE) solution.
Subsidence risk mitigation
Prevention is better than a cure, but the very nature of subsidence means that it can be unpredictable. There are several practical steps you can take to mitigate your risk of subsidence:
- Conduct comprehensive geotechnical and structural surveys pre-acquisition or development.
- Use modern foundation reinforcement methods, especially for new buildings.
- Implement regular monitoring with crack sensors and ground movement devices.
- Develop vegetation management plans with arboriculture experts.
- Employ modern foundation reinforcement techniques as needed.
- Collaborate with local authorities, utility providers, and specialist consultants.
- Encourage tenants and property users to report early signs of subsidence.
- Integrate climate change projections into long-term risk strategies.
The reasonableness of these measures will vary, depending on the size and importance of the property. For advice on how to mitigate your subsidence risk (and property risk more generally), contact your Client Executive who can put you in touch with our risk consulting team. Subsidence claims can be complex and frustrating for those unfortunate enough to be affected, which is why it’s important to have an insurance broker by your side, who can support you through the claims process.
By leveraging Marsh’s expertise, clients can ensure timely reporting, effective mitigation strategies, and optimised claim outcomes, ultimately protecting their assets and minimising disruption from subsidence-related issues. Contact us to discuss your properties risk requirements.
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