At the end of a dry summer, homeowners increasingly report the same thing: a crack running from the corner of a window down to the floor, a partition wall pulling away, a door that sticks. The natural thought is: “the ground has moved, that is what the insurance is for”. Home insurance policy conditions, however, draw a sharp line through ground movement: sudden, accident-like events – landslide, collapse, the caving-in of a cavity, earthquake – are covered, while slow, gradual processes – subsidence, shrinkage, settlement – typically are not. Cracking caused by drought falls into the latter group in most cases, and this gives rise to disputes where millions of forints are at stake. This article sets out the boundary honestly, together with what you can do before and after reporting the claim.
- Home insurance is built around sudden, accident-like events: landslide, falling stones and earth, the collapse of an unknown cavity and earthquake are typically insured events – whereas slow subsidence, shrinkage of the soil as it dries out, or the settlement of fill are typically excluded in the policy conditions.
- A crack in itself is not an event but a symptom: the insurer examines what caused it – so whether the claim is declined or paid depends on the content of the loss adjuster's report, and often of the structural engineer's report, not on the size of the crack.
- Missing drainage, the gutters, a tree planted next to the foundations or poor foundations are, under the policy conditions, typically maintenance or construction causes – these are not insured events, but the key to prevention lies with you.
What is typically an insured event?
The basic package of the MNB's Certified Consumer-Friendly Home Insurance (MFO; the MNB is Hungary's central bank and financial supervisor) – and most basic covers on the market – includes “landslide, falling stones, rock and earth” and the “collapse of an unknown structure or unknown cavity”, as well as earthquake. Policy conditions typically describe a landslide as damage caused by a sudden change in the equilibrium of the ground, on sloping terrain, through an unexpected slide down the slope; in the words of one Allianz condition, “ground displacement… arising as a result of a suddenly occurring change in the physical or strength/stability equilibrium of the soil”. The collapse of an unknown cavity rests on the same logic: the natural equilibrium ceases and a sudden ground displacement or collapse occurs towards the cavity – typically with the proviso that the insured person did not previously know about the cavity. The common denominator is “sudden” and “unexpected”: the event can be tied to a point in time and is not the result of a long process in the building or the ground. The article on earthquake and flood describes the limits of the other two major natural-peril covers.
What is typically excluded?
When it comes to ground movement, the exclusion lists in policy conditions are unusually uniform. One MFO product information document puts it this way: the insurance does not extend to damage caused by “the settlement of fill beneath buildings/structures, or subsidence of the ground beneath the foundations”. One supplementary natural-perils condition excludes the consequences of mining activity, earthworks carried out by the insured person, foundation defects, and damage connected with the subsidence, shrinkage and swelling of the ground and the settlement of fill. According to another condition, “the collapse of cavities arising from inadequate foundations or drainage of the insured buildings” is not an insured event, and some product information documents also exclude damage resulting from subsidence due to changes in the groundwater level.
The typical mechanism of drought cracking falls squarely within these exclusions: clay soil shrinks as it dries out, support disappears beneath part of the foundation, and the wall cracks under its own weight; with the first heavy rain the soil swells and the crack “works”. The policy conditions treat this process not as a sudden event but as gradual damage arising from the properties of the soil and the condition of the building. A broker's expert answer from 2022, in a case of cracking after a drought, says the same: “Home insurance pays for sudden, accident-like damage; its cover does not extend to damage arising from wear and tear, workmanship defects or structural defects.” Important: this is an exclusion, not an exemption of the insurer. The insurer is not saying that you did something wrong, but that the damage is not what the contract covers. The exclusion map covers this in more detail.
Borderline cases: when it is not clear-cut
Not every crack case is clear-cut, and that is exactly why it is worth reporting rather than shrugging it off. If a sudden cloudburst washes out the foundation, or water from a burst pipe hollows out the ground under the building, the origin of the damage may be an insured event – cloudburst or escape of water from pipes – even if the symptom is the same crack; in such cases, too, the policy conditions examine whether missing drainage or a lack of maintenance was behind it. The article on escape-of-water damage deals with the limits of tracing the leak and of the repair. If the cavity beneath the building really was unknown – an old cellar, well or sewer – and the collapse can be tied to a point in time, it may fall within the collapse of an unknown cavity. The distinction is made by the loss adjuster and, in disputed cases, by a structural engineer and a geotechnical expert; the decision therefore does not depend on your impression or the claims handler's, but on a professional description of the cause of the damage.
Reporting, documentation, dispute
The primary route for reporting is the insurer's claims line, and it is worth doing, because the insurer decides on the basis of the loss adjuster's inspection, not over the phone. Before and during the process, document: photos of the cracks with a tape measure and the date; if the crack is spreading, a simple plaster “tell-tale” across it, whose breaking shows movement; a note of when you first noticed it and what the weather was like beforehand. If the stakes are high, a structural engineer's report on the cause of the damage and the necessary intervention, commissioned at your own expense – this is the strongest document both in the insurer's procedure and in any later dispute. If the claim is declined, ask for the reasons in writing, with a precise reference to the relevant clause of the conditions; after the insurer's complaints procedure, the Financial Arbitration Board (PBT) or the court can decide – the MNB does not rule on individual claim disputes. As a broker I do not represent you in a claim, but if a case gets stuck or disputed, I help where I can: in comparing the policy conditions with the rejection and in reviewing the complaint route.
Prevention – the part in your hands
In most ground-movement claims the policy conditions point to a lack of maintenance, and this part really is yours. Keeping gutters and downpipes clear, leading rainwater away from the building, eliminating puddles along the pavement and the plinth, avoiding planting thirsty trees close to the foundations, and in a drought keeping the soil along the plinth evenly moist – these are not insurance questions but building questions, yet they decide the majority of cracks. That is why a lack of maintenance is among the first of the common reasons for declining a claim. Insurance is for sudden trouble; a slow process is prevented by looking after the building.
What should you do now?
If there is already a crack: photos, date, plaster tell-tale, a report on the claims line and, if the stakes are high, a structural engineer. If there is none yet: look up in your own policy conditions the definitions of landslide and of the collapse of an unknown cavity, and the exclusions, so that you know what to expect; and walk around the building following the path of the rainwater – this is the simplest “cover” against ground movement.
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Sources
- MNB (Hungary's central bank and financial supervisor): Certified Consumer-Friendly Home Insurance (MFO) – risk groups of the basic package
- Allianz Összhang MFO product information document (AHE-12731/1) – exclusions: settlement of fill, subsidence beneath the foundations
- Allianz: supplementary natural-perils insurance – definitions and exclusions for landslide, falling stones and earth, and unknown cavities
- Groupama Garancia home insurance conditions – collapse of an unknown cavity, foundation and drainage exclusion
- Groupama Vesta home insurance product information document (GB540, 2022) – exclusion of subsidence due to changes in the groundwater level
- CLB – the expert answers: Cracked walls (August 2022)
- Financial Arbitration Board (PBT, MNB)
