United States: Washington Court Finds Coverage For "Collapse" Is Not Set In Stone

Last Updated: August 12 2016
Article by Mariko Shitama Outman

As this blog has documented, the language of insurance policies evolves; it changes to address new risks, and it also responds to new interpretations of old policy provisions. Even if a policyholder maintains a long-standing relationship with a single carrier, the availability of coverage might turn on whether the loss occurred in a particular policy term. Property coverage for "collapse" provides an example of this development. After a number of courts found that the word could be applied to the slow deterioration of structural elements, insurers began to include a narrower definition in the text of their policies. But last month, in American Economy Ins. Co. v. CHL, LLC, No. C15-899 (W.D. Wash. July 7, 2016), a federal court had to decide what the relevant term meant before any policy had defined it. As it turned out, the court held that the undefined term was still too narrow to provide coverage in that case.

The Long, Slow Road To "Collapse"

Structural collapse has been a problem since at least 1400 B.C.E. Property insurers were arguably late to the game: they began covering losses associated with the "collapse" of all or part of a building in the 1950s. See Nido v. State Farm Fire & Cas. Co., 454 So. 2d 328, 331 (La. Ct. App. 1984). Initially, policies did not define the term "collapse," other than to state that it did not include "settling, cracking, shrinking, bulging, or expansion." With just those exclusions to go on, courts took at least three separate approaches to interpreting the meaning of "collapse":

  1. Some courts held that a "collapse" is "a falling down, falling together, or caving into an unorganized mass." Thus, a collapse occurs only when all or part of a structure has actually fallen down. Olmstead v. Lumbermens Mut. Ins. Co., 259 N.E.2d 123 (Ohio 1970).
  2. According to other courts, coverage for collapse "does not require that structures fall." But it does require "serious impairment of structural integrity that connotes imminent collapse threatening the preservation of the building as a structure or the health and safety of occupants and passers-by." Fantis Foods, Inc. v. N. River Ins. Co., 753 A.2d 176 (N.J. Super. Ct. 2000).
  3. For still other courts, a "collapse" can occur, even in a structure that will remain standing for the foreseeable future, so long as there has been "substantial impairment of the structural integrity of the building or any part of a building." Am. Concept Ins. Co. v. Jones, 935 F.Supp. 1220 (D. Utah 1996).

The third, most expansive of these interpretations is currently the majority approach, while the narrowest view—that a building must actually fall down—is retained in only a minority of jurisdictions. Assurance Co. of Am. v. Assocs. LLC of Olympia, 379 F.3d 557 (9th Cir. 2004).

Defining "Collapse" Down

In 1999, to resolve this jurisdictional conflict, and to help insurers avoid assuming risks unintentionally, ISO promulgated a policy form that includes an express definition of the word " collapse." According to that definition,

Collapse means 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 a building cannot be occupied for its current intended purpose.

Yet this definition has resulted in another split of authority. A majority has found the definition unambiguous, and they have applied it to claims in a way that narrows coverage for collapse. E.g., Rapp B. Properties, LLC v. RLI Ins. Co., 885 N.Y.S.2d 283 (App. Div. 2009). But a minority has concluded that the definition is ambiguous, and so that it must be construed in favor of coverage for the insured. E.g., Malbco Holdings, LLC v. AMCO Ins. Co. 629 F.Supp.2d 1185 (D. Ore. 2009).

Insurers' efforts to clarify the nature of coverage for "collapse" have also been attacked in other ways. In Connecticut, several hundred homeowners have discovered a pattern of cracking in their basement walls, which they attribute to defective concrete from a single supplier. Some of these homeowners allege that their houses "ultimately" will "fall into their basements" if the basement walls are not replaced. These homeowners recently filed a class action lawsuit, Halloran v. Harleysville Preferred Ins. Co., No. 16-0133 (D. Conn.), in which they claim that more than a hundred insurers have "conspired" to deny coverage for concrete claims by, among other things, adopting a narrow definition of the word "collapse." [Full disclosure: Carlton Fields represents one of the defendants in the Halloran case.]

The complaint in that suit appears to propose a theory that insurers may not change the terms of a homeowners policy at the time the policy is renewed. It states:

This unilateral change [to the definition of "collapse'] was ineffective to alter or amend the terms of the original contract of insurance between the Defendant Insurance Companies and the Plaintiffs and/or putative Class Members and still did not foreclose coverage for homeowners with defective concrete.

It remains to be seen whether plaintiffs will pursue that theory, or whether the court will sustain it.

Past Policies Are Never Dead. They're Not Even Past.

Whether or not there is merit to the ideas being propounded in Halloran, policies that use the term "collapse" without defining it still govern many coverage disputes. This is because property policies are typically "occurrence" policies, which cover losses that occur during the policy period. Collapse claims often suggest that the alleged "collapse" was a manifestation of hidden damage—such as decay or insect damage—that the structure suffered years before it became apparent. Policyholders seek coverage for such collapses under policies that were in place at the time the original damage allegedly occurred.

Those were the circumstances in the American Economy case. In 2014, CHL, the owner of an apartment building, discovered significant decay of the building's rim joists. It sought coverage from American Economy, which had issued policies for the period from 1999 to 2002—policies that covered loss caused by "collapse," without defining that term.

The insurer sent a structural engineer to inspect the building, and the engineer determined that several of the decayed rim joists suffered from "substantial structural impairment." The engineer defined this to mean that the joists could not support the loads necessary to satisfy the local building code, and, as a result, that the building could be classified as a "dangerous building." He further concluded that the joists had reached this state sometime between 1999 and 2002, during the old policy period.

The policyholder's claim for coverage depended on whether "substantial structural impairment" of this kind fell within the meaning of "collapse," independent of any definition provided by later policies. As it happened, that issue was currently pending before the Supreme Court of Washington, in a case called Queen Anne Park Homeowner's Association v. State Farm Fire & Cas. Co., 352 P.3d 790 (Wash. 2015). The insurer in American Economy denied the claim, but agreed to reopen it if the Queen Anne Park decision turned out to favor the insured.

The dispute in Queen Anne Park began in 2009, after a condominium homeowners association discovered hidden decay in their buildings. The association alleged that "a substantial impairment of the structural integrity of [some] portion or component" of the buildings had occurred between 1992 and 1998, and it duly asserted a claim under policies issued for that period. As was the case in American Economy, an engineer found that the hidden decay had "substantially impaired" the ability of certain walls to resist lateral loads.

The insurer denied the claim, and the association filed an action for a declaratory judgment in a Washington federal court. The case eventually landed in the U.S. Court of Appeals for the Ninth Circuit, which certified the question of how to interpret "collapse" to the Washington Supreme Court.

The Washington court ruled that "collapse," as used without any definition in the 1992-1998 policies, was ambiguous—citing the courts across the country that had adopted "different but reasonable definitions" of the term. Because the term was ambiguous, the court also determined that it must adopt the meaning "most favorable" to the insured. Therefore, it "largely" agreed with the association's contention that "collapse" means "substantial impairment of structural integrity," and not an "imminent threat" of falling down.

However, unlike most courts that have taken this approach, see, e.g., Sandalwood Condo. Ass'n at Wildwood, Inc., 294 F. Supp. 2d 1315 (M.D. Fla. 2003); Beach v. Middlesex Mut. Assur. Co., 532 A.2d 1297 (Conn. 1987), the Washington court went further. It concluded that " 'substantial impairment' of 'structural integrity' means an impairment so severe as to materially impair a building's ability to remain upright." The court held that, in the context of the policy, "collapse" meant

substantial impairment of the structural integrity of a building or part of a building that renders such building or part of a building unfit for its function or unsafe . . . .

This additional language separates the Washington rule from the majority rule discussed above. Although the court stated that it was choosing the definition of collapse "most favorable to the insured," its choice worked out best for the insurer. On remand, the Ninth Circuit, affirmed the district court's decision, granting summary judgment against the association. Queen Anne Park Homeowner's Association v. State Farm Fire & Cas. Co., 633 Fed.App'x 415 (9th Cir. 2016). The Ninth Circuit found it "implausible" that certain walls of the condominiums had become "unfit for [their] function or unsafe" by 1998 (the year the policies expired), because the condominiums had continued to be used until 2012.

The Result in American Economy

American Economy denied CHL's claim a second time after the Washington Supreme Court had ruled in Queen Anne Park. By that time, CHL had filed an action for declaratory relief in federal court in Washington, and the insurer moved for summary judgment.

In granting that motion, the district court acknowledged that it was not bound by the Ninth Circuit's unpublished opinion in Queen Anne, but it found the reasoning of that decision persuasive nevertheless. Furthermore, although American Economy's engineer had found that CHL's building had suffered "substantial structural impairment" during the policy period, the court found that the engineer was using that phrase in accordance with the usage of the local building code, and not as it had been defined by Washington's high court in Queen Anne Park. That is, the engineer's statement did not imply any conclusion about the building's ability to "remain upright."

While CHL is correct that the building code is designed to protect safety, that does not mean that a failure to meet the building code necessarily means a building is 'unsafe' in the way the Washington Supreme Court used that term. . . . Importantly, the use of the word 'unsafe' by the Washington Supreme Court was a gloss on the first definition it had given for a building in a state of collapse: a building suffering from a 'severe impairment' of its 'ability to remain upright.'

In light of the fact that CHL's building had remained standing without renovation until 2014, the court, following the Ninth Circuit, found it "implausible" that the apartment building "had a severe impairment of [its] ability to remain upright between 1999 and 2002." The court held that the insurer was entitled to judgment, as a matter of law, that the building had not reached a state of "collapse" during the policy period.


In spite of insurers' inclusion of a definition of "collapse" in current policies, the policies of yesterday—which did not define "collapse"—are still relevant today. Moreover, the interpretation of these old policies is still evolving.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.