Why Home Insurance Rarely Covers Foundation Damage (and When It Does)

TL;DR: Why foundations aren’t covered - and when they are

- Insurers treat foundation movement as maintenance or earth movement, not a sudden accident - so standard policies usually exclude it.

- Damage from specific events can be covered: earthquakes, landslips, vehicle impact, explosion, or a sudden burst pipe that cracks a slab.

- In New Zealand, Toka Tū Ake EQC covers quake-related foundation damage up to a cap, with your private insurer topping up above that.

- Proof matters: date-stamped photos, engineer reports, and evidence the cause was sudden and insured (not gradual) swing claims your way.

- Reduce risk and denials: manage drainage, fix leaks fast, keep trees in check, and log maintenance. It’s cheaper than underpinning.

The real reason foundations get excluded

Insurance loves sudden, accidental events. It hates slow change. Foundations sit on the slow side of the ledger. Most foundation damage shows up over months or years: soil dries and swells, water loads a wall, a tiny leak softens clay, or a tree quietly steals moisture. Underwriters file that under wear and tear or maintenance, not an insurable event.

Look at a typical homeowners policy template (think the ISO HO-3 in the U.S. or standard house policies here in New Zealand): it covers sudden and accidental loss. Then it lists exclusions that bite foundations especially hard: earth movement, settling, shrinking, bulging, defective construction, and long-term water or moisture. That’s why you hear, “Foundations aren’t covered.” They’re not uncovered because they’re unimportant; they’re excluded because the causes usually aren’t accidental.

There’s also a pricing problem. Foundation repairs can be eye-wateringly expensive and unpredictable. A crack might be a $900 epoxy job or a $90,000 underpin. Insurers need predictable losses to price policies fairly. If they covered every crack caused by gradual movement, premiums would jump for everyone. So they draw a hard line: no to gradual movement, maybe to sudden events that happen to damage the foundation.

I live in Wellington, where ground conditions and quakes keep engineers busy. I’ve seen neighbors win and lose claims with almost identical-looking cracks. The difference wasn’t the crack. It was the cause and the evidence tying it to a covered peril versus slow movement. That gap - cause and proof - is the whole game.

Construction defects are another landmine. Policies nearly always exclude poor design, bad pours, weak reinforcing, or code failures. If a slab heaves because the builder didn’t compact or used corrosive fill, insurers call that a workmanship issue, not an insurable event. The fix might still involve moment frames or piers, but the bill likely won’t come from your insurer.

When foundations are covered anyway (and how to prove it)

Here’s the good news: the blanket “never covered” line isn’t true. Foundations can be covered when a named peril causes the damage. Your job is to connect the dots between event and crack - with dates, photos, and a credible report.

Common covered scenarios across regions include:

• Earthquake or natural landslip: In New Zealand, Toka Tū Ake EQC covers residential building damage (including foundations) from earthquakes, natural landslips, volcanic activity, hydrothermal activity, and tsunami, up to a statutory cap (NZ$300,000 + GST as of 2024). Your private insurer steps in above that. Similar earthquake endorsements exist in quake-prone parts of the U.S. and Australia.
• Sudden accidental discharge of water: A burst pipe or hot-water cylinder that rapidly undermines soil and snaps a slab can be covered under the “sudden and accidental” water damage clause. Slow leaks are usually excluded.
• Explosion, fire, vehicle impact: If a car hits your perimeter wall or an explosion cracks the footing, that is classic insured damage.
• Storm and flood: Coverage hinges on policy and country. Flood policies in some countries cover structural elements of foundations when scoured by floodwaters; seepage through pores is still commonly excluded.
• Subsidence and heave: In the UK, subsidence is often covered (with a chunky excess), including damage to foundations, but settlement from poor fill isn’t. In Australia and the U.S., subsidence is more often excluded unless specifically endorsed or tied to a named peril.

What evidence sways a claim?

• Timing: Cracks or differential movement appearing immediately after an earthquake, storm, or burst pipe are easier to tie to a covered peril. Date-stamped photos help.
• Engineer’s report: A structural engineer linking the damage mechanism to the event (e.g., lateral spread, liquefaction, scouring, sudden subgrade washout) is gold.
• Moisture/drainage proof: Moisture meter readings, CCTV drain surveys, and soil reports can separate sudden events from long-term issues.
• Maintenance records: Show you’ve kept gutters clear, managed surface water, and fixed leaks promptly. Insurers love proactive owners.

Want a quick regional snapshot? Use this table as a starting point, then check your own policy wording and local law.

Policy details shift - the EQC cap changed in 2022, and private policies update wording. For decisions that matter, read your schedule and talk to your insurer. In New Zealand, the Insurance Council’s guidance and the Toka Tū Ake EQC Act are the anchors. In the U.S., the ISO HO-3 template is the baseline many insurers use. In the UK and Australia, check your Product Disclosure Statement and the relevant industry codes of practice.

One more tip: if you see “earth movement” excluded, that usually sweeps in settlement, subsidence, heave, landslide, and even man-made soil movement - unless your policy carves out exceptions or you have a specific endorsement.

What to do when you see cracks or movement (step-by-step)

Don’t panic-scroll. Take a calm, clinical approach. Your goal is to document, stabilize, and pinpoint cause.

1. Document fast: Take wide and close photos with a coin or ruler for scale. Note dates, recent weather, nearby works (excavations, burst mains, heavy trucks), and any quake you felt. Keep a simple log.
2. Measure and monitor: Mark crack ends with a pencil and date. Use crack gauges if you have them, or measure widths monthly. Hairline under 1 mm rarely signals structural failure. Jumps to 3-5 mm or sudden stair-stepping in brickwork deserve urgent attention.
3. Triage water: Check gutters, downpipes, drains, and plumbing. Fix obvious leaks. Redirect downpipes at least 1-2 m from the footing. Gutters blocked? Clear them today. Water is the cheapest variable you control.
4. Call the right expert: A chartered structural engineer beats a general builder for diagnosis. If you suspect a pipe failure, book a plumber with CCTV. If trees are close, an arborist’s root opinion helps.
5. Read your policy: Look for “sudden and accidental,” “earth movement,” “gradual damage,” and any natural disaster clauses. Note your excess. New Zealand readers: EQC for quake/landslip; your private insurer for storm/flood building damage.
6. Start the claim early: Notify your insurer as soon as practical. Early notice preserves rights and gets you guidance on what reports they’ll accept. Keep receipts for temporary measures (pumps, tarps, drain snaking).
7. Don’t rush repair type: Underpinning, polyurethane injection, helical piers, or slabjacking each fit different soils and causes. Insurers often ask for two quotes and an engineer sign-off. Let the diagnosis lead.

Severity shorthand I use at home:

• Cosmetic: hairline plaster cracks; doors stick in humidity; no sloping floors. Monitor and fix moisture first.
• Moderate: recurring diagonal cracks at openings; 5-10 mm gaps; minor floor slope. Get an engineer, check drains, consider localized remediation.
• Serious: rapid changes; jammed doors; 15+ mm movement; clear footing displacement; water scouring. Treat as urgent. Shore if needed and call insurer/engineer now.

Evidence pack that wins adjusters over:

• Timeline: before/after photos around the event (storm, quake, burst pipe). Phone metadata is your friend.
• Engineer letter: one page stating the most likely cause and the mechanism (“sudden hydraulic scour undermined footing”). Avoid vague language.
• Moisture/drain proof: CCTV footage, leak detection reports, moisture readings.
• Maintenance: receipts for gutter cleans, drain work, and plumbing fixes. Shows prudence, undermines “gradual damage” arguments.

Costs, prevention, and your action plan

Foundation fixes range from “weekend DIY” to “sell a kidney.” Ballparks vary by country, soil, and access, but these ranges keep you grounded:

• Crack injection/epoxy: NZ$800-$3,000 per crack (USD $500-$2,000). Works for non-moving, dry cracks.
• Drainage fixes (swales, downpipes, sump, perimeter drain): NZ$3,000-$20,000 (USD $2,000-$12,000). Often the highest ROI preventive spend.
• Slabjacking/polyurethane injections: NZ$4,000-$25,000 (USD $3,000-$15,000) for targeted releveling of sunken slabs.
• Helical piers/underpinning: NZ$20,000-$150,000+ (USD $15,000-$100,000+) depending on length, number of piles, and access.
• Full relevel post-quake (older villas in places like Wellington/Christchurch): NZ$60,000-$250,000+ depending on piles, subfloor, and bracing.

Will insurance pay? Only if the cause is covered. A burst pipe that undermines soil under your slab? Possible. Long-term clogged gutter causing saturated clay swell? No. Earthquake-induced lateral spread under your footing? In New Zealand, EQC/private cover applies within their rules.

Prevention checklist that actually moves the needle:

• Control water: Keep runoff off your footings. Extend downpipes 1-2 m. Maintain a gentle slope away from the house (10-20 mm per metre for the first few metres).
• Fix leaks fast: Any unexplained water bill jump? Hunt the leak. A week matters.
• Trim trees smartly: Keep thirsty species (willow, poplar, eucalyptus) away from clays. If they’re close, manage water evenly around the house to avoid differential drying.
• Mind the garden: Don’t bank garden beds against cladding. Leave inspection gaps. Avoid irrigation that soaks one side only.
• Document: Annual photos of key corners, doors, and skirtings. It’s a five-minute habit that pays during claims.
• Know your soil: If you’re building or extending, get a geotech report. Design footing and drainage to match the site, not a brochure.

Rules of thumb for choosing a repair approach:

• If the cause is ongoing moisture: fix drainage before structural work. Otherwise the problem returns.
• If movement is localized and stable: injection or localized underpin can be cost-effective.
• If movement is widespread or ongoing: look at comprehensive stabilization (piers/underpinning) and soil-water management.
• If quake/landslip damage is likely: start the claim first. Don’t do permanent repairs before the assessor sees it.

How to talk to your insurer without getting lost:

• Use their language: sudden and accidental; direct physical loss; named peril; not gradual; event date; expert report attached.
• Stay neutral on cause until you have an engineer’s view. Guessing “it’s probably subsidence” can box you into an exclusion.
• Ask for clarity in writing: “Can you point me to the clause that covers/excludes this scenario?” It keeps the conversation factual.

Credibility markers you can quote: the ISO HO-3 policy form (U.S.) treats earth movement as excluded unless endorsed. Toka Tū Ake EQC (NZ) covers residential buildings, including foundations, for specified natural hazards up to its cap. The UK Financial Ombudsman has many subsidence decisions showing how evidence and tree roots affect outcomes. Australia’s General Insurance Code of Practice sets expectations for clear decisions and fair claims handling timelines.

And because SEO robots will ask: yes, foundation insurance coverage is a thing - but it hangs on the cause. You don’t insure the concrete; you insure the risk event that hurts the concrete.

FAQ and next steps

Does home insurance ever pay for underpinning? Yes, when the need for underpinning flows from a covered event (e.g., earthquake, sudden washout from a burst pipe, or, in the UK, qualifying subsidence). If the trigger is gradual settlement or poor compaction, insurers decline.

Are hairline cracks a reason to claim? Not usually. Hairline plaster cracks are cosmetic. Claims get traction when cracks are structural (widening, stepped in brick, doors jamming, measurable floor slope) and tied to a specific event.

Can I buy special coverage for foundations? You buy coverage for the peril, not the foundation. Options include earthquake insurance (U.S., NZ, AU) and subsidence cover (UK). In some U.S. states, mine subsidence insurance is separate. Water backup endorsements help with drains but rarely pay for foundation movement.

Will flood insurance cover my foundation? It can, if the foundation is damaged by floodwater as defined in the policy (rising external water). Seepage through a wall from wet soil is often excluded. Check your flood policy’s definition and exclusions.

What about tree roots? UK policies often consider root-induced subsidence, with high excess and mitigation (root barriers or tree work). Elsewhere, root damage to foundations is commonly excluded unless it triggers a named peril.

How fast do I need to claim? As soon as practical. Policies require prompt notice. Natural disaster schemes (like EQC in NZ) also have timeframes. Even if extensions exist, delays make proof harder.

Who should I call first: insurer or engineer? If there’s an emergency risk, call your insurer now. Otherwise, an engineer first can sharpen your claim by identifying the cause and best repair path. Ask your insurer if they prefer panel engineers.

Do I need two quotes? Many insurers ask for two independent quotes for transparency. If access or safety makes that impractical, say so and provide detail on scope and methodology.

What if the insurer denies my claim? Ask for the specific policy clause and the evidence used. If you disagree, submit an engineer’s rebuttal. Use your country’s dispute channels (e.g., NZ’s IFSO Scheme, the UK’s Financial Ombudsman, Australia’s AFCA, or your state regulator in the U.S.).

Next steps - pick your track:

• If you just found a crack: Document, stabilize water, book an engineer, read your policy, and notify your insurer if a sudden event may be involved.
• If you’re mid-claim: Tighten your evidence - timeline, engineer summary, drain/CCTV report. Ask the adjuster to confirm what else they need for a decision.
• If you were declined: Request the decision in writing with cited clauses. Get an independent report addressing causation. Escalate through the insurer’s complaints process, then to the external dispute body if needed.
• If you’re planning renovations: Commission geotech and structural design. Build drainage in from day one. It’s cheaper than retrofitting piers later.
• If you’re in a quake or landslip zone (hello, Wellington): Keep an “event file” ready - photos after shaking or storms, notes, and receipts. It makes EQC/private claims smoother.

One last pragmatic thought from a windy hill in Wellington: water management beats most gadgets. Get the rain away from your footings, fix the leaks you can’t see (yes, the buried ones), and gather proof when nature throws a punch. That’s how you keep your foundation - and your claim - standing.