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

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A case holding for the liberal view is Allstate Ins. Co. v. Forest Lynn Homeowners Association, 892 F. Supp 1310 (W.D. Wash. 1995), a Federal Court for the Western District of Washington. 5 The court held that the meaning of collapse when the term is not defined in the policy means “substantial impairment of structural integrity.” The court rejected Allstate’s assertion that the structure had to fall down before coverage applied.

There are numerous court decisions addressing the meaning of collapse, some favoring the traditional view, others the liberal view. Many of these decisions provided insurers with a clear message to define what is meant by the term “collapse” if they wanted to clarify their intent and avoid litigation. In response, ISO and AAIS introduced language limiting collapse to a flattened form of rubble. One version of the homeowners policy developed by AAIS, for example, contains a provision that states, “...collapse of a building or part of a building means the sudden and unexpected falling in, caving in, or giving way of the building or part of the building into a flattened form of rubble.” Under the exclusion for settling, cracking, shrinking, bulging, terms such as expanding, sagging, bowing, bending, leaning, impairment, and collapse have been added. It is also specifically stated that there is no coverage for “a weakening or impairment of structural integrity.”

ISO has also added language to its homeowners and commercial property policies that limits collapse (when caused by certain perils) to an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose. In addition, the term “collapse” is further limited in that 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, nor is a building that is standing, even if it has separated from another part of the building.

Reproduced below is language defining collapse that is contained in the ISO 2000 edition homeowners policy:

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“…it appears that insurers have fortified their position with this new wording in standard property insurance forms to exclude coverage for loss by collapse unless there has been an actual collapse…”


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