This category would cover you if a neighbour caused your property to subside because of building work. But accidental damage is not included automatically on all policies. Full cover of this sort may only be available as an extra.Mr Hooker has seen claims turned down for all these reasons. Insurance companies may put this problem down to wear and tear, says Mr Hooker.Other problem areas are “settlement of newly made up ground” – you are unlikely to know what the ground is like under your foundations – and accidental damage. A form of concrete often used in the South-west reacts with cement and can disintegrate, reducing foundations to dust. Defects in workmanship or materials used is another exclusion which the policyholder may not be in a position to judge.

If the foundations remain unaffected, this problem will not be covered as subsidence. In his view, insurers should “educate policyholders on what they will and will not pay for”. Subsidence is a grey area: the word is not properly defined in policies and there are exclusions that may be beyond the policyholder’s control.Mr Hooker cites a large insurance company that is refusing to pay a subsidence claim on an old, extended property because the foundations under the extension are relatively shallow. The claim failed on the grounds of “inadequate foundations” – something the houseowner could hardly have known about.Other grounds for exclusion include “compaction of infill”, where the hardcore under your floor moves, taking the floor with it. Direct Line has produced a free booklet, Cracking the problem of subsidence, (01473 824447) which advises on ways of planting trees and shrubs to minimise the risk.The insurance companies are also reassuring: they say there are no “at- risk” postcode areas they will not cover, that they will not exclude subsidence from cover after a claim has been paid and that if you want to sell a house with a history of subsidence, the current insurer will usually transfer cover to the new owner.But civil engineer Rob Hooker of the Subsidence Claims Advisory Bureau, sees a different picture. Other sectors of the industry are anxious not to create panic among policyholders. This is part of the message in a leaflet on subsidence from the Royal Institute of Chartered Surveyors whose information service will give members of the public the names of three surveyors in their area who specialise in the problem.
Insurers are also trying to calm nerves.

“Even a wet summer cannot stop the momentum which is already in place,” it said. In 1995 the insurance industry paid out pounds 326m in subsidence claims. This represented almost 45,000 claims averaging over pounds 7,000 each. The Chartered Institute of Loss Adjusters recently predicted a 50 per cent increase in claims on top of last year’s threefold growth. But, if you believe it’s more likely to live on, buying shares in a Lloyd’s investment trust is by far the safest way to back your hunch.George Soros is taking a calculated, and limited, risk with his money.. Nevertheless Lloyd’s trusts are a cheap way into this market.There is an outside risk that if the Lloyd’s rescue deal does not go ahead, the pleace could still founder.

There is also increased interest in Lloyd’s because the reconstruction deal is almost certain to go through. There has been underwriting profit in 1994 and 1995, at Lloyd’s. Most of the trusts are 15 to 20 per cent undervalued.”Jonathan Fell, an analyst at Merrill Lynch, agrees with Mr Bunker’s sentiments except for his concern that 1996 will not be such a good year because insurance premium rates have fallen, making the industry less profitable. Despite the rises, the small number of analysts who follow the trusts are unanimous in their belief that the trusts are still significantly undervalued.Nick Bunker, an analyst at ABN Amro Hoare Govett, said: “Prices have gone up because the net asset values of the trusts have increased because the stock market has gone up. If there are losses then the investments can be cashed in to pay policyholders.Patience is required. It takes three and a half years for the first insurance profits to be paid out by Lloyd’s, due to the market’s three-year accounting rule.Fifteen trusts have been set up to support underwriting at Lloyd’s. Since 1994, when the first trusts were launched, their stock market prices have generally floundered at below the net asset value in their underlying investment.

But prices have risen in recent weeks, largely since Mr Soros’s interest became known to the stock market. The trust, like any other, makes a return by putting your money in stocks and shares. At CLM, a Lloyd’s trust, the funds are placed in an FT-SE 350 index tracker fund. Others, such as Limit (Lloyd’s Insurance Market Investment Trust), use discretionary funds.Profits from these investments should be comparable to those made in similar stock market vehicles but Lloyd’s trusts offer the chance of a second income stream because these investments are used as collateral for insurance underwriting by syndicates at Lloyd’s If the syndicate makes a profit then the trusts also receive a payout. These offer less profit in return for a cap on any losses, up to but not more than the amount invested.Lloyd’s investment trust shares are listed on the stock market. They offer the investor the chance to earn profits twice over without the danger of losing more than you put in.