“Collapse” in Homeowners’ Policy Requires Proof of Imminent Danger of Residence Falling Down 

In a trio of opinions, the Connecticut Supreme Court held that the “substantial impairment” standard for the term “collapse” requires proof of imminent danger of the home falling down.   Moreover, the Connecticut Supreme Court found that a home’s “foundation” unambiguously includes the basement walls of the home.  

The coverage disputes stemmed from problems with defective concrete manufactured by J.J. Mottes Concrete Company that was used to pour foundations in thousands of homes across northeastern Connecticut beginning in the 1980s.  The policyholders discovered their basement walls were cracking and crumbling. All of their homes, however, remained standing and there was no proof that they would soon fall. The policyholders argued their homeowners’ policies provided coverage because the deterioration of the concrete within the basement walls had substantially impaired the walls’ structural integrity such that they were in a state of “collapse” as defined by the Connecticut Supreme Court in Beach v. Middlesex Mutual Assurance Co., 205 Conn. 246 (1987).  According to the Beach opinion, the term “collapse” in a homeowner’s policy, when otherwise undefined, “is sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity” of the insureds’ home.  Conversely, the insurers urged for a temporal requirement and argued that the policyholders could not establish a “substantial impairment of structural integrity” of their basement walls without proof of imminent danger of the house falling down.   

The Karas v. Liberty Insurance Corporation case addressed questions on certification from the District Court.  The policy at issue provides in relevant part: “We insure for direct physical loss to covered property involving collapse of a building caused only by one or more of the of the following . . .. Collapse does not include settling, cracking, shrinking, bulging or expansion.”  The Connecticut Supreme Court concluded that (1) the “substantial impairment” standard established in Beach for the undefined term “collapse” applied to the case at hand; and (2) the “substantial impairment” of structural integrity standard requires proof that the home is in imminent danger of falling down, not merely proof that it will eventually fall to the ground.  The Connecticut Supreme Court also found that the term “foundation” in the policy’s exclusion for losses tied to foundation collapses unambiguously encompasses a home’s basement walls.    

The Vera v. Liberty Mutual Fire Ins. Co. case also addressed a question on certification from the District Court.  The Vera court relied heavily on the Karas opinion and similarly found that “the ‘substantial impairment of structural integrity’ standard requires a showing that the building is in imminent danger of falling down or caving, that is, in imminent danger of an actual collapse.” 

In Jemiola v. Hartford Casualty Ins. Co., the policy at issue defined “collapse” as “an abrupt falling down or caving in” of the home such that it “cannot be occupied for its current intended purpose.”  The Connecticut Supreme Court found the definition of “collapse” to be unambiguous. It held that the policyholder’s claim was barred by the definition of “collapse” because the home was still standing and the policyholder continued to reside there, and according to her expert, she could continue to do so safely for the foreseeable future.   Further, the court noted that even if it did agree with the policyholder that the definition of “collapse” was ambiguous and, therefore, Beach’s substantial impairment standard applied, its ruling would remain the same in light of the Karas ruling. Karas v. Liberty Ins. Corp., Case No. SC 20149 (Conn. Nov. 12, 2019); Vera v. Liberty Mut. Fire Ins. Co., Case No. SC 20178 (Conn. Nov. 12, 2019); Jemiola v. Hartford Cas. Ins. Co., Case No. SC 19978 (Conn. Nov. 12, 2019).