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

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So, for example, in the Safeco v. Guyton case, where negligent construction of the flood control system was a contributing cause of the loss along with flooding, there likely would be no coverage for that loss had the above lead-in language to the general exclusions been included in the policy.

Other changes involved reformatting the policy with respect to collapse coverage. Prior to the emergence of the concurrent causation doctrine in property insurance, collapse was plainly stated under named perils coverage as applying to “collapse of a building or any part thereof,” without any qualifications. Subsequently, due to the increased exposure to insurers created as a result of the concurrent causation concept, insurers responded by specifically excluding loss by collapse in homeowners and commercial property policies, but adding it back as an additional coverage, but with a limited scope. Standard forms now specifically exclude loss by collapse, except as provided under the additional coverage for collapse. In other words, loss by collapse is excluded, but then given back as an additional coverage but only if caused by certain perils.

As an additional coverage, covered causes of collapse are now limited to specific named perils, such as fire, wind, hail, weight of ice, snow, or sleet, etc.; hidden decay; hidden insect or vermin damage; weight of people or contents; weight of rain that collects on a roof; or the use of defective materials or methods in construction, remodeling, or renovation, if the collapse occurs during the course of construction. This last covered cause of collapse is worded so as to preclude coverage for a collapse caused by faulty construction that occurs after construction is completed. However, the owner of the structure could attempt to recover from the negligent contractor or builder.

Reproduced below is collapse coverage language in a 2000 edition Insurance Services Office (ISO) Homeowners policy. (Commercial insurance policies read similarly.)

Keep in mind, however, that coverage for collapse may not be included in some named perils policies (e.g., some older version Businessowners (BOP) named perils, Homeowners Form 1, in rare...

“In other words, loss by collapse is excluded but then given back as an additional coverage but only if caused by certain perils.”

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1 Copyright, Insurance Services Office, Inc., 1999, with permission.


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