Most homeowner and commercial first party property policies exclude coverage for collapse. Some property policies then provide a “give-back” for collapse as an additional coverage with respect to certain named perils. The more common give-back for collapse is with respect to additional coverage for the weight of ice and snow.
Some (usually older) property forms either do not define the term “collapse” or define the term as what it is not, i.e., “shrinking, bulging, settling or cracking.” Some courts interpreting these policies find that the term “collapse” is unambiguous and means an event that is both sudden and results in a “falling down” of the structure. See, e.g., Central Mut. Ins. Co. v. Royal, 269 Ala. 372 (1959). Some other jurisdictions interpreting these policies find that the term is ambiguous and can mean “substantial impairment” of the integrity of the structure, but that collapse must also be “imminent.” See KAAPA Ethanol, LLC v. Affiliated FM Ins. Co., No. 10-1929, 660 F.3d 299 (8th Cir. 2011) (providing historical discussion of collapse exclusion and review of various jurisdictions’ analysis of the meaning of collapse). Interpretation can depend on the precise wording of the policy language, which varies.
Many first party property policies now define the term “collapse” as an “abrupt falling down or caving in of a structure such that it can no longer be used for its intended purpose.” Most courts interpreting this language find that the substantial impairment and imminent collapse standards are not applicable. See, e.g., Residential Mgmt. (NY) v. Fed. Ins. Co., 2012 U.S. Dist. LEXIS 113136 (E.D.N.Y. Aug. 10, 2012) (interpreting New York law).
The United States District Court for the District of Connecticut recently reaffirmed its ruling that the term “collapse,” as defined by a homeowners insurance policy, is unambiguous and that the policy in question did not provide coverage for the alleged “cracking” and/or “bulging” of the insureds’ foundation walls. In Alexander v. Gen. Ins. Co. of … Continue Reading
In insurance fraud cases involving actual or alleged destruction of evidence by the insured, an issue often arises regarding whether an adverse inference instruction is appropriate, and, if so, what form it should take. The Second Circuit recently approved a “light” form of adverse inference instruction that allowed the jury to make an adverse inference … Continue Reading
A New York trial court recently addressed the definition of “collapse” and the meaning of the ensuing loss clause in Copacabana Realty LLC v. Fireman’s Fund Insurance Company, No. 10-2919, 2013 NY Slip Op 30960(U) (NY Sup. Ct. Suffolk County Apr. 29, 2013), granting the defendant insurer’s motion for summary judgment on both issues and … Continue Reading
The United States District Court for the Southern District of New York was recently tasked with deciding on summary judgment whether: (1) a rooftop water tank and its supporting steel frame structure “collapsed” due to hidden decay, which would have been a covered cause of loss, or (2) the loss was caused by rust or … Continue Reading
Interpretation of the meaning of the term “collapse,” both in the context of a covered peril and as an exclusion, is an often litigated issue where the property has not actually fallen to the ground. In Kings Ridge Community Association, Inc. v. Sagamore Insurance Company, 2012 Fla. App. LEXIS 10882 (Fla. 5th DCA, July 6, … Continue Reading