Hydro Consolidation and Earth Movement Exclusions in Property Insurance
Hydro consolidation and earth movement exclusions in Property Insurance…
Hydroconsolidation, which is also known as soil collapse is a property damage hazard where dry, loose, and unsaturated soils undergo rapid volume reduction and severe settlement when they become wet.
Cracking and severe building movement can occur and be a substantial loss to an insured and in some cases even require demolition.
The below Insurance News article is an old one from 2021 but it’s still relevant to this issue.
And I must say I am seeing on repeat for homeowner insureds and commercial property owner insureds this issue being denied by insurers and even on the back of assertions that the soil movement is the proximate cause.
And that is the issue - a total loss claim can arise and be covered or not depending upon whether the proximate cause is either:
-
deemed the sudden escape of liquid event - ie hydro consolidation; or
-
solely deemed to be arising from soil movement.
Obviously in practice both occur. But it is the proximate cause and expert evidence in support that is critical.
Plus, depending on how the insured frames a claim can define if the policy responds or not. Many unrepresented insureds at AFCA gain their own evidence and don’t understand the legal and factual distinctions at hand.
The expert selected and experience becomes critical here - a geotechnical engineer with substantial relevant experience is needed and the right testing. A structural engineer can opine on the damage but may miss the evidence needed to substantiate the proximate cause.
Under most domestic or commercial property policies there will be a soil movement exclusion and escape of liquid cover.
If you are a homeowner or broker and you have an insured with this issue, don’t assume it simply covered or uncovered, the obtaining of the right expert evidence properly instructed becomes critical here. Reach out if you have any questions.
This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Recent articles
-
A Satirical Look at How Professional Indemnity Claims Really Get Handled
Introducing Continuity Perpetuity, a fictional insurer whose proprietary claims methodology ensures every claim is perpetually considered and then vigorously defended.
-
Royal Commissions Spectacle or Genuine Reform
With Victoria's Royal Commission into major construction projects underway, the real question is not who gets called or charged. It is what actually comes out the other end.
-
Does Victorian Building Warranty Insurance Really Protect Subsequent Owners
A significant concern is emerging about the practical protection warranty insurance gives to people who buy a home after the building works are finished. Fall-Armytage brings it into focus.
-
How Domestic Insurers Use Cash Settlements to Underquote Repairs
Insurers increasingly offer cash settlements from preferred repairers that will not cover the cost of the actual repairs, and the scope of works proposed is often not enough.