4th Aug 2016
There is a split of authorities over the scope of collapse coverage where the policies leave the term “collapse” undefined. See § C38 COLLAPSE OF A BUILDING [§ C38:1 In general]. Insurance companies reacted by defining “collapse” and elaborating on the collapse definition in an attempt to make the scope of coverage clearer. This effort has met with limited success, as courts continue to grapple with disputes regarding the nature and scope of coverage. Consequently, the split in authority continues. One line of case law holds that “collapse” requires a complete falling down or a flattening to rubble before the loss becomes insured. The other line of cases (which has been termed the ‘modern’ and ‘majority’ view) holds that the building need not entirely or even partially fall down in order for damage to rise to the level of a collapse. Rather, the property is deemed to have collapsed if the damage materially impairs the basic structure or substantial integrity of the building. [Grebow v. Mercury Ins. (2015) 241 Cal. App. 4th 564, 572-573]
More explicit language to define collapse
Insurance companies have asserted more explicit language in attempts to narrow the scope of collapse coverage. Courts have found such provisions to be unambiguous. Provisions which exclude damage to a building unless and until some part of the building has actually fallen down or has been reduced to rubble are enforced. [Grebow v. Mercury Ins. (2015) 241 Cal. App. 4th 564, 573] A policy that includes clauses such as “sudden and complete breaking down or falling in or crumbling into pieces or into a heap of rubble or into a flattened mass” and excluding “substantial impairment of the structure or building” and “a condition of imminent danger of collapse of a structure or building” are valid and enforced. Grebow v. Mercury Ins., supra, distinguishing Panico v. Truck Ins. (2001) 90 Cal. App. 4th 1294 (six ceiling tiles fell into the insured’s storeroom with no evidence that such ceiling tiles fell due to excluded “corrosion”, “wear and tear”, “deterioration”, or “rust”). [Grebow v. Mercury Ins. (2015) 241 Cal. App. 4th 564, 574]
Collapse coverage; when coverage applies
Under modern and current first party property policies, collapse will exist when caused by a direct physical loss to covered property when any part of a building caused ONLY by one or more of the following perils:
1. perils insured against under Coverage C [personal property]
2. hidden decay [§ COLLAPSE OF A BUILDING [§ C38:6 Hidden decay]
3. hidden insect or vermin damage [§ V7 VERMIN]
4. weight of contents, equipment, animals or people
5. weight of ice, snow, sleet or rain which collects on a roof; or
6. use of defective material of method in construction, remodeling, or renovation if the collapse occurs during the course of construction, remodeling or renovation. [Grebow v. Mercury Ins. (2015) 241 Cal. App. 4th 564, 569 (definition stated in policy)] See § COLLAPSE OF A BUILDING [§ C38:3 Insuring clause insuring loss or damage involving “collapse” of a building, or any part of a building].
Efficient proximate cause; use of word “ONLY” does not preclude application
Insurers contend that the limiting words “caused ONLY by one or more of the following” means that a “collapse” is a covered loss only if no other peril other than those listed contributes to the collapse. Under this interpretation, if any peril other than those listed in the limited causes for collapse triggers collapse coverage is excluded. This being so, insurers contend that the efficient proximate cause doctrine does not apply and the giving of CACI instruction 2306 would be in error. The insurer’s argument has been rejected. [Vardanyan v. Amco Ins. (2015) 243 Cal. App. 4th 779, 793, distinguishing Julian v. Hartford (2005) 35 Cal. 4th 747 discussed in § W13 WEATHER CONDITIONS [§ W13:2]]
Unlisted perils contributing to loss
The collapse-coverage-triggers such as hidden decay, hidden insect or vermin damage, weight of contents, etc. described above may combine with unlisted causes which are excluded. Where the policy does not refer to such combined excluded perils, if the collapsed “coverage” triggers are the predominate cause of the loss, the efficient proximate cause rule applies and coverage exists. See discussion Vardanyan v. Amco Ins. (2015) 243 Cal. App. 4th 779, 796. The reading to the jury of CACI 2306 is proper. [Vardanyan v. Amco Ins. (2015) 243 Cal. App. 4th 779, 796] See § J13.03 JURY INSTRUCTIONS [§ J13.03:4.5 CACI 2306].
Awnings, fence, swimming pool, tennis court, underground pipes not covered
Loss to an awning, fence, patio, pavement, swimming pool, tennis court, underground pipe, flue drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included in items 2, 3, 4, 5 and 6 unless the loss is a direct result of the collapse of a building. [Grebow v. Mercury Ins. (2015) 241 Cal. App. 4th 564, 569 (definition of collapse set forth in policy)]
◆ COMMENT: If the policy definition of collapse is less restrictive than in Grebow v. Mercury Ins., the analysis of coverage could be different. See discussion in § COLLAPSE OF A BUILDING [§ C38:2 Defined].
References in bold are to Mr. Cornblum’s legal text CALIFORNIA INSURANCE LAW DICTIONARY AND DESK REFERENCE (2015, 2016), published by ThomsonReuters (1-800-344-5008 to order 3-Volume text). 2016 Edition now available.