1976 and 2018; UK heatwave draws unwanted comparisonson
The Met Office amongst others are drawing comparisons with this years’ hot dry summer and that of 1976.
In the early 1970’s with the boom in home ownership, mortgage providers thought Subsidence cover would be a useful addition to insurance coverage to protect their financial interests. Insurers were happy to oblige and add this low risk peril as standard to their policies.
In 1976 the summer was long and hot, resulting in zero rainfall for 45 days, dry reservoirs and a severe drought, which led to water rationing in several regions. Many properties were affected by subsidence caused by clay shrinkage, resulting in a massive surge in subsidence claims, which proved to be both unexpected and very expensive for insurers.
Subsidence is now a standard peril in both home insurance and commercial property insurance.
Time will tell whether this years’ long dry summer will cause similar problems to 1976. If so, as usual, the insurance industry will be there to pick up the cost.
However, Subsidence damage is complex, requires qualified professionals to asses and draw up remediation programmes and the costs of these can run into many thousands of pounds for each property affected.
This could in turn lead to higher insurance premiums in the future, as insurance companies balance their books.
Yet another example of how the insurance industry is critical in supporting the wider UK economy and absorbing costs that would otherwise fall on property owners.
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