What Constitutes a Collapse under a Property Insurance Policy
Reprinted from the "The Brief," Vol.29, No.2 (Winter 2000), a publication of the American Bar Association.
The meaning of the term collapse has undergone evolution both as an exclusion and as an insured peril under standard property insurance forms. Courts in the various jurisdictions have taken one of two general approaches in determining what constitutes a collapse. The most longstanding view is that collapse is a plain and unambiguous term susceptible of only a single meaning: "the sudden falling-in, loss of shape, or flattening into a mass of rubble" of a building.(1) While courts taking this view do not always require that a building fall completely to the ground, they generally require a great deal of damage before collapse coverage will be triggered.(2)
In contrast, some courts have found collapse to be ambiguous. Acknowledging that the traditional definition is one valid interpretation of the word, these courts nevertheless have expanded the definition to include "substantial impairment of the structural integrity" of a building.(3) Upon a finding that two reasonable constructions of the word are available, these courts have adopted the broad meaning because that meaning typically is most favorable to the insured.(4)
Unfortunately, the term structural integrity is not explicitly defined in the case law. A certain amount of disparity therefore exists among the "broad view" courts with respect to both the amount and type of damage necessary to trigger coverage. Some of these courts actually require caving or falling in before they will find a building's structural integrity to be impaired.(5) Others require only a danger of collapse, or, in a few cases, an attenuated possibility of collapse.(6) Additionally, they may or may not require that the damage occur or be likely to occur "suddenly."(7)
Over the past decade or so, the broad definition of collapse attempted to establish itself as the majority rule in the coverage jurisprudence. That trend, however, has met with resistance in recent years and effectively has been reversed. Judicial reacquisition of the traditional collapse definition has been prompted both by the return of "plain-language" contract interpretation principles and by changes in policy language designed to combat artificially expanded coverage. Recognizing the disparity between jurisdictions as to what is and is not a collapse, the Insurance Services Office (ISO) has altered the language of the former collapse provisions to nullify the broad approach. The language of this new, more specific form will be analyzed later in this article.
An important early decision construing and establishing the definition of "collapse" in a property policy came in Nugent v. General Insurance Co. of America.(8) In Nugent, the insured suffered cracking and plaster loss to the interior and exterior walls of his home. The cracks, which were caused by subsoil drying and shrinking during drought years, in turn had caused the structure's footings to settle. The homeowner's policy insured against the "collapse of building(s) or any part thereof." The insured contended that because the footings supported the exterior walls they were part of the building; therefore, the settling constituted a collapse of part of the building.
The opinion did not specify whether the policy contained exclusions for sinking, bulging, settling, or expansion, as most modern policies do; the court commented only that this coverage type was relatively new and probably was first written in 1954. Applying Missouri law, the court held that the enumerated damage did not constitute a collapse and that no coverage was afforded under the policy.
Through the years, many state courts have continued to apply the plain, unambiguous meaning of collapse. Most of these courts have required some sort of falling down or caving in to trigger coverage. For example, in Heintz v. United States Fidelity & Guaranty Co.,(9) the court held that rotting, deterioration, and wasting away of studding, sheathing, and lathe did not constitute a collapse. Reasoning that the mere possibility of collapse was insufficient, the court was unpersuaded that coverage should be triggered by an impending collapse simply because the policy imposed a duty upon the insured to mitigate damages by making necessary repairs.
In Dominick v. Statesman Insurance Co.,"(10) the court held that a building must "fall together" or "fall in" to constitute a collapse. There, the first floor of the insured's home moved downward about one inch, resulting in a slight separation of the walls from the floor. The damage was caused by the rotting of the main beams under the home. In reversing the trial court's summary judgment ruling in favor of the insured, the court determined that "the better public policy is to require a structure to fall together or fall in to constitute a collapse.(11)
Similarly, in LaSalle National Bank v. American Insurance Co.,(12) an office building suffered cracked walls, sinking floors, cracked and sagging ceilings, distorted lintels, the shifting of overhead beams, and the shifting of sinks and urinals mounted on walls, all as a result of noncovered "settling." Holding that a collapse requires that "the structure's basic character be lost," the court declined to rule that a collapse had occurred.(13)
One traditional view court has determined that a building must be "unfit for habitation" before a collapse is indicated. In Lambros v. Standard Fire Insurance Co.,(14) the court held that evidence of cracks in walls, doors dragging out of line, separations on terrazzo floors, the pulling away of stairs from the house, and the shearing of one stud column and the cracking of others was insufficient to show collapse absent a finding that the dwelling had been unfit for habitation.(15)
In some traditional view cases, the courts have required that only part of a building actually cave in or fall down as a prerequisite to coverage. In Ambrose v. State Farm Fire & Casualty Insurance Co.,(16) the insured homeowners hired a subcontractor to replace their front-porch slab, which slanted toward the house and thereby caused water to collect and leak into the basement. The contractor installed steel rods under the north and west sides of the home and rested the slab on the cinder-block foundation at the south and east sides. Shortly thereafter, the porch slab again tilted toward the house. The court reversed the trial court's ruling that the occurrence did not constitute a collapse, holding that the concrete slab had "fallen down" due to inadequate structural support.
Similarly, in Barash v. Insurance Co. of North America,(17)coverage was triggered where a concrete slab in the insured's basement fell four inches overnight. Noting that the collapse of the basement slab caused the walls and floors throughout the house to go out of plumb and out of level, the court reasoned that it was not necessary that the house fall down in a heap in order to trigger coverage. Although not entirely clear, it appears that the Barash court based its ruling of collapse on the sudden falling down of the basement slab as opposed to any impending collapse of the house itself, In another similar case, Shields v. Pennsylvania General Insurance Co.,(18) collapse coverage was triggered when a front corner of the plaintiff's home actually fell down and a window casement separated from the wall. Notably, where a partial collapse is at issue, coverage generally applies, if at all, only to that portion of the structure that suffers "direct physical loss or damage." In Rest Assured, Inc. v. American Motorist insurance Co.,(19) the weight of snow caused some of the trusses in the insured's roof to break. The insured argued that, pursuant to the broad view definition of collapse, coverage should be provided for the nonbroken trusses as well as the broken ones. The court declined to reach the issue of whether collapse coverage should apply to the unbroken trusses, ruling instead that there was no coverage because the threshold physical damage requirement had not been met with respect to the unbroken trusses.
Degree of physical damage
Contrary to the above cases, however, some courts do not require that a building or one of its parts cave in or fall down before coverage will be triggered. These courts appear instead to require only that a degree of physical damage must occur.
In Sherman v. Safeco Insurance Co. of America,(20) for instance, coverage was triggered where two or three layers of brick from the upper portion of the solid brick exterior of the insured's home had fallen out and landed on the sidewalk below, causing the roof to sag. The city required the insureds to vacate the house. The court held that an object need not completely fall to the ground to constitute a collapse but that a collapse occurs "by a flattening or breaking down because of a loss of its structural rigidity or by falling into or against itself." The policy at issue provided coverage for collapse of any portion of the building. Since a roof and supporting foundation are "parts" of a building, the court remanded for a determination of whether a collapse had occurred under the foregoing definition.
The traditional definition of collapse also requires that damage occur suddenly, as opposed to gradually over an extended period of time. For instance, in Barash, the court characterized a four-inch depression as a collapse rather than as an excluded settling because it was a sudden, overnight occurrence. Similarly, in Shields, the dropped corner of the insured's house was a collapse because it happened suddenly. In Block v. St. Paul Fire & Marine Insurance Co.,(21) the court, distinguishing Shields, held that the structure's cracked foundation did not constitute a collapse where there was no "instantaneous structural damage."
In LaSalle National Bank, the court expressly held that collapse requires that the loss be of a sudden nature. The court held that no collapse had occurred where noncovered gradual settlement had caused cracked wails, sinking floors, cracked and sagging ceilings, distorted lintels, the shifting of overhead beams, and the shifting of sinks and urinals mounted on walls.
In addition to the suddenness requirement, the damage also must be fortuitous in order to constitute a collapse. Where the insured is aware of the conditions leading to the damage before it actually occurs, there can be no collapse coverage. In Clendenning v. Worcester Insurance Co.,(22) a homeowner's policy expressly excluded damage caused by insects "except as may be hidden and which results in a collapse of all or part of the structure." The insured became aware of carpenter ant infestation to her porch and garage when a workman stepped through the porch. In ruling that collapse coverage applied only to the damaged portion of the porch and not to the previously-hidden infestation in the rest of the porch and garage of which the insured had become aware, the court observed:
The hidden destructive process must run its full course to be insurable. Anything short of that is expressly excluded under the policy. A collapse. within the meaning of the policy, is a perceptible event or state caused by a specific degenerative process, here, the patient gnawing of swarms of carpenter ants. There are no degrees of collapse. The policy does not cover "imminent" collapse, as [the insured] argues. It covers only collapse. Neither a sudden event nor a state of collapse was ever established here, except as to that portion of the side porch which gave way under the workman's fall and which was accepted by [the insurer] as damage covered under the policy.(23)
Courts following the broad view define collapse to mean "substantial impairment of the structural integrity of the building."(24) While some of these courts require that the collapse be impending or imminent before coverage is triggered, others require that some actual falling down or caving in of the building occur before a collapse may be found. Fidelity & Casualty Co. v. Mitchell(25) illustrates the latter view. There, the court appeared to adopt the "impairment of structural integrity" test but in the same breath held that the destruction of a building's structural integrity required that at least some portion of the building had actually fallen down. The Mitchell court held that collapse coverage was triggered where a stairway and surrounding area had fallen in some eight inches from the primary walls as a result of termite infestation.(26)
Similarly, in Campbell v. Norfolk & Dedham Mutual Fire Insurance Co.,(27) the court, while impliedly adopting the broad. definition of collapse, observed that many courts have defined collapse as not requiring the "total destruction of a building" (emphasis added). The court's use of total destruction seems to imply that partial destruction could constitute collapse but that absent at least a degree of current physical damage, no collapse could be found. The court remanded to determine whether an ordinary home purchaser would consider the falling-down of a 19-foot section of a 32-foot basement wall a collapse.
In a few broad view cases in which the collapse involved a falling down, the courts did not address whether the falling down was a specific requirement for coverage. In Guyther v. Nationwide Mutual Fire Insurance Co.,(28) snow atop the root caused the roof to push down and out instead of being just a straight, flat roof. As a result, the second floor of the house dropped two to three inches, the ceiling in the downstairs area of the house became bowed, the floor separated from the baseboards in some areas, a door in the house became wedged shut, and the kitchen cabinets pulled away from the wall. The court held, without comment on the falling-down issue, that coverage had been triggered. Similarly, in Auto Owners Insurance Co. v. Allen,(29) coverage was triggered where concrete blocks in a wall had separated or cracked, one exterior wall already had fallen down, and it was the opinion of a witness that the entire building soon would collapse.
In most broad view jurisdictions that do not require an actual falling down., collapse must at least be imminent or impending before coverage will be triggered.. These courts extend coverage to impending collapse on the grounds that insurance policies place an affirmative duty on the insured to mitigate damages and/or to maintain and repair the property. Accordingly, the courts reason, the insured should not be deprived of reimbursement for money spent trying to prevent the actual collapse of the building.(30)
The decision in Doheny West v. American Guaranty & Liability Insurance Co.,(31) demonstrates the tendency of broad view courts to require that a collapse be at least impending before coverage will apply. In Doheny, the California Court of Appeals defined collapse to require an imminent or impending collapse but refused to extend the definition to induce mere "impairment of structural integrity." In that case a swimming pool and hot tub had been built atop a condominium parking complex. A structural engineer later observed substantial spalling and cracking of the girders, columns, and wall surfaces in the parking structure, especially in the area around the pool vault. On the engineer's recommendation, the condominium complex drained and repaired the pool and repaired the parking structure.
The insured then sought recovery under the collapse provisions of its policy. The trial court held that the policy provided coverage only for actual or imminent collapse and that the insured had failed to prove that any portion of the building was in imminent danger of collapse. On appeal, the insured argued that the so-called modern view requires coverage so long as there is substantial impairment of structural integrity to the building. The court of appeals disagreed and affirmed the trial court's ruling. The court observed that in all of the cases in which the courts have adopted the broad view of collapse, it has been implicitly or explicitly required that, in addition to structural impairment, the collapse also must be inevitable or all but inevitable.
The court first noted that an insured would not reasonably expect the policy to cover "mere impairment of structural integrity." The court further reasoned that, because any of the excluded causes could result in collapse if the initial damage was neglected for a long enough period, "an additional limitation is logically necessary if we are to avoid converting this insurance policy into a maintenance agreement."(32) The court observed that its construction of the policy "avoids [both] the absurdity of requiring an insured to wait for a seriously damaged building to fall and the improper extension of coverage beyond the terms of the policy, and is consistent with the policy language and the reasonable expectations of the insured."(33)
As noted in Doheny, the vast majority of courts adopting the broad approach have implicitly or explicitly required impending collapse, even though they have purported to require only an impairment to structural integrity. In some cases, the courts have found the insureds' preclaim attempts to prevent collapse as persuasive evidence that collapse would have occurred absent the insureds' efforts. For example, in Ercolani v. Excelsior Insurance Co.,(34) coverage was triggered where the insured had applied support trusses to a wall after he heard loud moaning and shrieking noises emanating from the wall, noticed a crack in the wall, and observed the wall bulge and move inward.(35)
Similarly, in Nationwide Mutual Insurance Co. v. Tomlin,(36) the insured applied support trusses after the home's tree-stump foundation began to sink and its exterior walls began to crack and pull away from the structure. The Tomlin court held that a collapse occurred "when there is a reasonably detectable serious impairment of structural integrity."
In some cases the testimony of third parties regarding the potential for collapse has contributed to a finding of coverage. In Tomlin, for instance, the court found that "there was unrefuted testimony that the seriously deteriorating condition of the Tomlin home would eventually lead to collapse in the traditional sense. . . ." In Beach v. Middlesex Mutual Assurance Co.,(37) the court found coverage where there existed a nine-inch crack in a foundation wall, a separation between the foundation wall and the bottom of the building, and a witness who testified that the house would have caved in had the plaintiffs not acted to repair the damage.(38)
Even in cases finding coverage where only the integrity of the structure purportedly was at issue, the facts usually have indicated that collapse in fact was impending. In Whispering Creek Condominium v. Alaska National Insurance Co.,(39) the Anchorage Department of Public Works noted during an inspection of a condominium complex that some of the ceilings showed signs of possible collapse; the ceiling joists had deteriorated to a point where they were not capable of supporting a water or snow load. The department thereafter posted warning notices and informed the residents of the need to correct or abate the dangerous conditions. The court held these facts sufficient to trigger collapse coverage. Similarly, in Hampton Foods v. Aetna Casualty & Surety Co.,(40) the court held that coverage was triggered where windstorms or a snow load caused several tie beams in a building to snap, thereby weakening the structure to the point of impending collapse.
In Kay v. United Pacific Insurance Co.,41(41) the court refused to grant the parties' motions for summary judgment, finding that a fact issue existed regarding the imminent threat of a collapse. In Kay, cracks in an exterior wall's bricks enabled moisture to seep in, causing a high percentage of the bricks to crack further. The moisture also had begun to corrode the building's steel reinforcement structure. The court first observed the possibility that the moisture could cause bricks to fall from the building's exterior facade, resulting in more corrosion and the impairment of structural integrity. At the same time, however, the court was unable to hold, on the record before it, that the conditions at the building were "so critical that a collapse [was] in progress." The court concluded that the issue of collapse should be submitted to a jury.
Some courts adopting a broad interpretation of collapse do not require an element of suddenness and as such will not preclude the extension of coverage to a gradual occurrence. For example, in Tomlin, the Georgia Court of Appeals expressly stated that suddenness is not a requirement of a collapse. Coverage was triggered in Tomlin where the brick walls of the house began to crack and gradually pull away from the structure.
In other cases, however, courts adopting the broad definition of collapse in fact have required that the occurrence happen suddenly. In Guyther, the North Carolina Court of Appeals expressly held that collapse includes the "sudden, material impairment of the basic structure or integrity of the building." Coverage was triggered in Guyther where the second floor of the insured's home abruptly dropped two or three inches as the result of heavy snow.(42)
New ISO collapse provisions
As noted above, the ISO changed the language of its collapse coverage provisions to reflect more accurately the intended meaning of the word collapse. The new language reads as follows:
8. Collapse is deleted and replaced by the following:
a. With respect to the Additional Coverage:
(1) Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building cannot be occupied for its intended purpose.
(2) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.
(3) A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building.
(4) A building that is standing or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.
b. We insure for direct physical loss to covered property involving collapse of a building or any part of a building if the collapse was caused by one or more of the following:
(1) Perils Insured Against in Coverage C--Personal Property. These perils apply to covered buildings and personal property for loss insured by this additional coverage.
(2) Decay that is hidden from unless the presence of such decay is known to you prior to collapse;
(3) Insect or vermin damage that is hidden from view, unless the presence of such damage is known to you prior to collapse;
(4) Weight of contents, equipment, animals or people;
(5) Weight of rain that collects on a roof; or
(6) Use of defective materials or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included under Items (2), (3), (4), (5), and (6) unless the loss is a direct result of the collapse of a building or any part of a
The first readily apparent distinction between the existing and new forms is the express addition of a temporal element to the definition of collapse in subdivision 8a.(1) of the new form. The new form confirms that coverage is limited to abrupt fallings down or cave-ins, requiring that the activity constituting the collapse must happen over a short period of time. Under the new form, the express holdings in cases such as Guyther--that suddenness is a requirement of a collapse--would be endorsed explicitly to nullify erroneous decisions such as Tomlin.
The next distinction is the new form's express requirements in subdivisions 8a.(1) and (2) that a collapse must involve a falling down or caving in and that the mere danger of falling down or caving in does not constitute collapse. These new provisions should render many of the broad view holdings obsolete. By the very terms of the policy, the status of the structural integrity of a building, as well as the degree of imminence of the collapse, would not be at issue absent an actual falling down or caving in.
Next, subdivision 8a.(3) of the new form. explicitly excludes from the definition of collapse parts of buildings that have separated from other parts of the building if the parts remain standing. This policy language is in accord with the holding in many traditional view cases. For in stance, in Dominick, the court held that the separation of a dropped floor from the walls of a building was not a collapse where the building remained standing despite the separation. If this new policy language was applied to building separation facts similar to those in broad view cases such as Mitchell and Guyther, collapse coverage probably would not apply
Finally, the new policy language in subdivisions 8a.(2) and (3) adds an important new element: Where the damage results from hidden decay or insect/vermin damage, no collapse coverage is provided if the presence of the decay or damage was known to the insured prior to the collapse. Read in conjunction with the other new provisions that require an actual falling down, a fair comprehensive reading of the subdivision 8b.(1)-(6) provisions corrects the erroneously decided broad view cases, reestablishes the fortuity condition in all insurance, and confirms the responsibility upon the insured to mitigate against any known risk of collapse, while providing coverage for collapse where the damage constitutes an actual falling down or caving in and is the result of unknown or unexpected causes.
As this article suggests, courts in the various jurisdictions adhere to one of two basic approaches to defining collapse in existing all-risk policies. The traditional view characterizes the term as unambiguous and accordingly requires "the sudden falling-in, loss of shape, or flattening into a mass of rubble" of a building as a trigger for collapse coverage.
Other courts--those adhering to the broad view of collapse--purport to require as a trigger for coverage only that the structural integrity of the building be impaired. In both traditional view and broad view jurisdictions, however, it generally is clear that a building or a part thereof either must have fallen down or be at serious risk of doing so before collapse coverage will be triggered. While it may appear that the broad view jurisdictions have applied a more liberal definition of collapse in finding the existence of coverage, a careful examination of the facts in such cases reveals that coverage was triggered only where, in fact, there was clear danger of an actual collapse. Accordingly, coverage under existing policies should not be triggered where the facts indicate only that the building may be subject to collapse at some indeterminate time in the future. In the face of conflicting holdings across the jurisdictions, ISO has promulgated new insuring provisions for damage involving collapse. The new provisions are in keeping with the holdings of many traditional view courts in that they expressly define collapse to require an abrupt occurrence that results in an actual falling down or caving in of a building. The new provisions also decline to extend coverage for collapse resulting from conditions of decay or insect/vermin infestation that are known to the insured prior to the collapse.
The traditional rationale of those broad view courts that trigger coverage merely on a showing of potential collapse rests on the misguided notion that forcing insureds to wait for an actual falling down would contravene the insured's duty to mitigate damages. This rationale, however, constitutes a manufactured conflict inasmuch as it is founded on a strained definition of collapse. Under the broad view of the term, some courts have stretched the definition of collapse to provide coverage for nonabrupt, nonsudden occurrences. This erroneous construction effectively has given the insured
leave to ignore potential known problems, safe in the knowledge that coverage eventually would be provided. The resultant coverage for damages that have occurred gradually over time impermissibly moves the burden of mitigation from the insured to the insurer.
Had the broad view courts applied the proper and intended definition of collapse in the first instance, the "conflict" between an insured's right to collapse coverage and its duty to mitigate damages simply would be simply nonexistent. Under the new policy language, the stars hopefully will come into proper alignment. The occurrence causing a collapse must be abrupt. It actually must cause a collapse, and it must be unknown or unexpected by the insured prior to the collapse. The plain meaning of collapse will be reinstated, in keeping with the reasonable expectations of both the insurer and the insured.
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