Insurance Coverage For Collapse: How Has It Changed and Why?



It was in the 1980s, and then again in the late 1990s, when substantial changes took effect concerning how the peril of collapse was covered, or limited, under property insurance. There were two primary reasons for these changes in policy language. One was the doctrine of concurrent causation; the other a series of court decisions that addressed the meaning of collapse itself and rendered the standard property insurance policy vulnerable to broadening coverage beyond insurers’ expectations.

Doctrine of Concurrent Causation

The doctrine of concurrent causation holds that when a loss can be attributed to two causes, one that is covered and one that is excluded, the loss will be covered. It applies primarily to “all risks” or “open perils” policies, rather than specific or named perils coverage.

To be clear, policies written on an all risks basis provide a wide-ranging grant of coverage, but subject coverage to a variety of exclusions. If the loss comes within the scope of coverage, and no specific exclusion applies, the loss is usually covered. In a named perils policy, the loss is not covered unless it was caused by one of the specifically named perils. Coverage written on an all risks or open perils basis is typically broader than coverage provided on a named perils basis.

Getting back to concurrent causation, it can be said that its application to property insurance took root in California with several notable court decisions. The doctrine then became the subject of court decisions in other states, and the aftermath of all those cases significantly alarmed insurers. The insurers’ concern over this doctrine was that its application ignored clearly excluded causes of loss such as flood and earth movement. In effect, it rendered those exclusions meaningless when a concurrent cause (e.g., negligence, faulty construction) that was not specifically excluded was a contributing cause of the loss.

Two of the more prominent California cases were Premier Ins. Co. v. Welch, 189 Cal. Rptr. 657, (Cal. App.), and Safeco Ins. Co. of...

“One of the first steps insurers took was to eliminate the ‘all’ from ‘all risks’ in the property insurance insuring agreement in policies written on that basis. This, insurers believed, would avoid creating unreasonable expectations on the part of insureds that most every kind of loss was covered.”