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When is a building collapse covered by insurance?

It is an easy accident to picture. For some reason, a building collapses. A home, rental complex or business simply collapses. "No worries," the owner thinks, "I've got insurance."

Unfortunately, coverage may not be as clear as the owner may think.

When is a collapse a collapse? The extent of coverage available for a building collapse will likely depend on the language of the policy. A recent case discussed this issue, noting that coverage in this type of situation is often broken into one of three categories: "(1) actual collapse, (2) imminent collapse, or (3) substantial impairment of a building's structural integrity."

The case that recently addressed this issue, as noted in a recent piece by the Claims Journal, applied the policy to these three categories. The policy in question specifically defined the term collapse as "an abrupt falling down or caving in of the building or any part of a building with the result that the building or part of the building cannot be occupied."

It is helpful to know the basic facts of the case in order to determine if coverage would apply. The case involved a home that was getting a second floor addition. The work completed by a contractor compromised the integrity of the home, causing the foundation to crack and fail, displacing a brick wall and leaving large gaps in existing mortar. Although the home was clearly unfit for habitation, the court noted that no wall had fallen. The policy in question also contained an additional provision specifically excluding coverage if the building in question "remained standing."

What can we learn from this case? This case provides an example of the power of the written word. Insurance companies are looking to make a profit. Unfortunately, this does not always translate to ethical practices. This can provide incentive for the company to provide subpar coverage for their policyholders and even deny coverage that is clearly supported within the agreement.

Policyholders that are attempting to navigate a denied claim are wise to seek legal representation. An experienced attorney can review the details of your case and your policy, advocating for your interests and working to better ensure a more favorable outcome.

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