A refresher on coverage for "collapse" under homeowners policies seems timely in light of the unprecedented flooding and tornadoes we have experienced in 1998. There is no coverage in homeowners forms for collapse of a structure, weakened by flooding, six days or so after flood waters recede. There is coverage for loss caused by collapse of a building, weakened by 200 MPH winds, a week after a tornado occurs.
What is the scope of collapse coverage in homeowners policies? For answers, we refer to the widely written Homeowners Special Form 3 drafted by the Insurance Services Office and the American Association of Insurance Services. The coverage is included under Additional Coverages in the ISO form; under Incidental Property Coverages in the AAIS form. Subject to language variations, the intent and effect of collapse coverage is similar in both forms. This is a result of long experience with the exposure and the objective of providing fair treatment for it.
Insurance is provided for "....direct physical loss to covered property involving collapse of a building or any part of a building caused only by...." specifically named perils.
* First and foremost among these are the named perils that are insured against under Coverage C (unscheduled personal property). Damage to covered buildings and personal property, caused by the collapse of a building or any part of it that is generated by any of the named perils, is covered. Coverage is also applicable to direct physical loss to covered property involving building collapse precipitated by:
* Hidden decay, meaning decay that is not visible to or otherwise known to the insured. There is clearly no coverage as a result of collapse from observable deterioration, wear and tear.
* Hidden insect or vermin damage. Termites are the familiar offenders. Their infestation is often unknown until costly repairs and treatment are necessary. Coverage would apply if, for example, the insured had no knowledge of flooring infestation and air conditioning or water heating equipment fell through as a consequence. If the insured had known of the problem and ignored it, there would be no recovery.
* Weight of contents, equipment, animals or people. Assume, for example, that an insured moved a grand piano into an upper room of a restored 1890s house. The floor collapsed with major structural damage and loss involving the piano and other personal property. Coverage is applicable.
* Weight of rain that collects on a roof. The occurrence that is contemplated most likely involves a flat roof. Coverage for roof collapse extends to structural damage and loss to contents.
* Use of defective material or methods in construction. remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. The potential for loss is especially substantial when a dwelling is furnished during the course of its remodeling. It is notable that collapse must have occurred during the performance of the work.
It is reasonable that special treatment is given to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock. Damage to these items is covered if a building collapses onto them as a result of: hidden decay, insect or vermin damage; weight of contents, equipment, animals or people; weight of rain that collects on a roof; use of defective materials or methods during construction, remodeling or renovation and the building collapses during the course of the work. However, damage to the listed items for "collapse" from such causes that occur within or on the items themselves is not covered.
It is significant that "....collapse does not include settling, cracking, shrinking, bulging or expansion...."
This is a specific exclusion, with respect to collapse coverage, under Additional Coverages and Incidental Property Coverages in the pertinent forms. Damage from long-term events is not a subject for insurance. Property insurance covers sudden occurrences. "Collapse" is defined in popular dictionaries as an abrupt and complete falling. That is its commonly understood meaning.
The present pertinent policy language is a product of lengthy claims experience with the exposure and constant attention to language clarification to delineate the scope of coverage. The peril was included in the Perils Insured Against section of policies a decade ago. Its present treatment makes clear that "collapse" is covered only when caused by specified perils enumerated with respect to Coverage C plus several other stated causes.
The courts have generally provided sound claims handling guidelines for insurers by affirming the commonly understood meaning of "collapse" in loss situations. Two cases in particular are helpful for reference purposes. One is Owens v. Tennessee Farmers Mutual Insurance Company, Tennessee Court of Appeals, Eastern Section C.A. No. 127, June 9, 1989. The other is Heintz v. United States Fidelity & Guaranty Company, Missouri Court of Appeals, Eastern District Division One No. 52199, April 21, 1987.*
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