Many people are uncertain as to whether cracks (even ones which they believe are minor and cosmetic) need to be disclosed to their insurers – either at inception, or at subsequent renewals. Incidents of insurers using non-disclosure of cracks as an excuse to void the policy (and hence avoid paying a claim) are on the rise. The Financial Ombudsman Service (FOS) site has many examples of decisions it has made in connection with such matters, and consistently supports insurers in voiding a policy from inception (start date) if the insurer can prove that a policyholder’s non-disclosure of material facts, such as cracks, was deliberate, reckless, or even careless, and would have resulted in the insurer declining cover entirely.
Key FOS Decisions and Principles
The FOS assesses these cases under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), which requires consumers to take “reasonable care” not to make a misrepresentation when arranging insurance. This means ensuring that all answers given to insurers’ questions (at inception and at every renewal) are true. For commercial policies, the onus on the policyholder is greater – they are required to volunteer any information which is considered to be “material” as well as just answer questions truthfully. “Material” is undefined, so arguments as to whether a fact was material or not are common. This is not the case with non-commercial insurance though.
- Insurer Action Depends on Culpability: The action an insurer can take depends on the nature of the non-disclosure:
- Deliberate or Reckless: The insurer can void the policy from the start and keep the premiums paid.
- Careless: The insurer can still void the policy if they can demonstrate they would not have offered cover at all, but they typically must refund the premiums.
- Materiality: Cracks are considered material facts because they directly influence the insurer’s assessment and acceptance of the risk. Insurers often have specific questions about past or current cracks, and failing to disclose known, visible cracks is often viewed as a failure to take reasonable care – whether they are subsidence cracks or not.
- Case Evidence:
- “Good state of repair”. A FOS decision in 2022 (DRN-3363529) upheld an insurer’s decision to void a policy where reports indicated cracks had been present before the policy started, and the applicant had stated the property was in a “good state of repair”. The policyholder had thought that minimal cracks present were unimportant surface cracks which didn’t detract from the building’s “good state of repair”. FOS found the misrepresentation to be reckless and the avoidance of the policy reasonable. They considered that even minimal surface cracks would have rendered the building not in a good state of repair.
- Another case in 2024. The insurer’s question was “Is the property free from cracking?” Applicant answered “yes” as they assumed historical internal cracking was due to the age of the plaster, and lack of redecoration. Upon later claiming for subsidence, the Insurer said that this answer was inaccurate, so voided the policy from inception – voiding of policy upheld by FOS (DRN-4887722)
- FOS decision DRN-5749924 (2025); The insurer’s question (at a renewal several years after policy inception) was “Within the last 10 years, has your property shown signs of cracking on the internal or external surface of an outside wall or party wall, whether this has been repaired or not?” The applicant answered “no”, as they had been told by their surveyor that cracking present when they purchased was historic and non-progressive. The insurer voided the policy on the basis that this answer was untrue, but that decision was not supported by FOS. The FOS held that the insurer’s renewal question implied ongoing or developing cracking in the last 10 years – not historic and non-progressive cracking.
It is not uncommon for the wording of a question at renewal to be different from that asked at inception – beware. Just because you answered correctly at inception does not mean that the same answer should be given at renewal. Many insurers are tightening up on subsidence underwriting now, as the cost of subsidence is crippling to the insurance industry. They are looking even harder for ways to avoid paying claims, and many are not offering cover at all to any property with any cracks, or any subsidence history.
2022 Price Comparison Website case (Mrs B v Qmetric Group Ltd – DRN-3660009);
This was a claim for storm damage to roof tiles. The FOS upheld the insurer’s decision to void the policy due to non-disclosure of a cosmetic render crack. There was never any subsidence to the property.
Mrs B had been aware when she bought the house that there was a crack in the outside render, but knew that this was cosmetic, and didn’t affect the brickwork – just the external render coating. No concerns had been raised about it in her survey. She sought insurance quotes through a price comparison website, which provided a form for completion before they could proceed to get automatic quotes from their member insurers. One question on the form was;
“Has your townhouse ever had cracks in its external walls? We only need to know if cracks have affected the main structure of your wall. You don’t need to tell us about minor cracks that have affected the render or plaster only”
She correctly answered ‘no” as she knew that they were not asking her to disclose render cracks.
Her answers on the form were automatically imported into the various insurers’ website questionnaires in order to produce competitive quotes and she clicked through to proceed with the quote from Qmetric. She was then taken through to Qmetric’s web page and found their form auto-completed with the answers she had already provided on the price comparison website. She accepted the quote and took out the insurance.
When a loss adjuster came round to look at the storm damage to her roof a few years later, he noticed the render crack and asked her about it – clearly looking to provide the insurer with an excuse to avoid paying the claim. She confirmed the render crack was there when she bought the house, but was not flagged up as a concern.
Upon receipt of the loss adjuster’s report, the insurer checked their proposal form and noted that their question has been worded differently to the price comparison site’s one. Their question asked her to confirm that;
“It [your property] does not show signs of cracking in external walls”
The auto-completed answer was affirmative. It is not clear whether Mrs B realised that the insurer’s question had subtly different wording, or what they meant by “external walls” (i.e. did that include the non-structural render finish or just the structural masonry behind?). The price comparison site had clearly defined “external walls” as the “main structure” – not including plaster or render finishes.
The policy was later renewed and one of the renewal questions was;
“Within the last 10 years, has your property shown signs of cracking on the internal or external surface of an outside wall or party wall, whether this has been repaired or not?”
Again this had been auto-completed with a “no” answer based on her previous given answers to similar questions at inception and previous renewals. She did not seek to change it – nothing had changed about this crack since she purchased the property.
The insurer then voided the policy from inception – alleging that she should have told them about the render crack (at inception), and had she done so they would not have given a quotation at all. It mattered not that the crack was only in the render. Their question was different to the price comparison site’s, which she should have realised and changed the auto-completed answer. They further added that at subsequent renewals she should have altered the auto-completed answers and had she done so they would have declined to renew.
Sadly, the FOS supported the insurer’s decision and Mrs B’s claim was denied and she left uninsured. The Ombudsman said that “It [your property] does not show signs of cracking in external walls?” was clear and unambiguous – and covered any cracking, not just cracking which Mrs B might think cause for concern. They were also persuaded that Qmetric would not have quoted if they knew a property had any cracking at all.
What to do
Not all insurers behave in this way, but more and more are doing so now, and are commonly (but not always) being supported by the FOS. The lesson is that the precise wording of the questions the insurer asks (at inception and again at every renewal) is very important to read fully and understand, and if there is any ambiguity you should err on the side of caution and disclose cracking – whether you believe it to be structural or cosmetic. Many insurers will still offer you subsidence cover if you also give them an expert’s report confirming that the cracking is not subsidence – though some (like the insurer in the above case) won’t.
Beware taking out insurance with any company whose policy is to reject offering cover at all to properties which have any sort of cracking. Cracks happen for many insignificant non-structural reasons all the time, so even if you have no cracks when you take out the policy, if a minor cosmetic thermal crack were to appear and you were to disclose that at renewal, then you may well have to change insurance provider. If you didn’t disclose it at renewal then you would be at risk of your policy being voided when you come to claim for something – possibly wasting all the money you had paid in premiums over the years. It would be good practise to establish (in writing) with your insurer what their policy is about insuring properties with cracks. If they say they will insure such properties (providing the cracks are non-structural for example) then they cannot later void your policy for non-disclosure of such cracks. You should also check at every renewal that this is still their policy – as insurers are changing their underwriting criteria about subsidence all the time.