On June 18, 2015, the Washington
Supreme Court answered the following certified question from the Ninth Circuit
Court of Appeals regarding the meaning of the undefined term “collapse” under the
first party property coverage of a policy State Farm issued to a homeowners association:
What does “collapse” mean under
Washington law in an insurance policy that insures “accidental direct physical
loss involving collapse,” subject to the policy’s terms, conditions,
exclusions, and other provisions, but does not define “collapse,” except to
state that “collapse does not include settling, cracking, shrinking, bulging or
expansion?”
The Washington Supreme Court first held that the undefined
term “collapse” is ambiguous. The court
then turned to the language of the State Farm policy and held:
“Collapse” in the Policy means the
substantial impairment of 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 in a manner that is more than mere settling, cracking,
shrinkage, bulging, or expansion.
Queen Anne Park Homeowners Ass’n v. State Farm Fire & Cas. Co. No. 90651-3, *8 (June 18, 2015).
The Supreme Court explained
that under the terms of the State Farm policy, “collapse” must mean something
more than mere “settling, cracking, shrinking, bulging or expansion.” Id. at *7. The court also noted that “structural
integrity” of a building means a building’s ability to remain upright and “substantial
impairment” means a severe impairment. Id. Taken together, the court said “’substantial
impairment’ of ‘structural integrity’ means an impairment so severe as to
materially impair a building’s ability to remain upright.” Id.
Soha
and Lang attorneys are available to assist insurer clients in understanding
and addressing the impact of this decision both during the claims handling
process and after an allegation of bad faith claims handling has been made.
Disclaimer:
The opinions expressed in in this blog are those of the author and do not
necessarily reflect those of Soha and Lang, P.S. or its clients.
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