The traditional view holds collapse is covered when there is either a
falling down or a caving-in – into a flattened form of rubble.
But the
liberal view holds a collapse happens when there is a substantial
impairment of structural integrity, without an actual collapse of the
building or part thereof being necessary.
Last week, the Washington Supreme Court rendered a decision on the
meaning of the term collapse when it is undefined in a policy.1 In this
particular case in Seattle, Washington, a condominium association
submitted a claim to its carrier, State Farm, when it discovered “hidden
decay” on the two-story building’s supports.
State Farm denied coverage
under the Policy on the basis that a “collapse” did not occur. The
association argued that the inspection revealed decay that the
association believed had caused “substantial impairment to the
structural integrity” of the buildings during applicable insurance
policy periods.
In September 2011, the association filed suit in
Washington federal court for declaratory relief and breach of contract
and moved for summary judgment under the argument that the term
“collapse” when undefined in an insurance policy means “substantial
impairment of structural integrity.”
The Ninth Circuit Court of Appeals
certified a question to the Washington State Supreme Court to define
what “collapse” means in an insurance policy under Washington state law
when an insurance policy covers “accidental direct physical loss
involving collapse” but does not otherwise define the word except to say
that ‘‘collapse does not include settling, cracking, shrinking, bulging
or expansion.”
The Court adopted the more liberal view of collapse and explained:
Here the insured requests that “collapse” be interpreted to mean
“substantial impairment of structural integrity.” We largely agree. Of
the definitions offered to us, substantial impairment of structural
integrity is both reasonable and the most favorable to the insured.
Based on the language of the Policy, however, we caution that “collapse”
must mean something more than mere “settling, cracking, shrinking,
bulging or expansion.” ER at 142. Also, we note that “structural
integrity” of a building means a building’s ability to remain upright
and “substantial impairment” means a severe impairment. Taken together,
“substantial impairment” of “structural integrity” means an impairment
so severe as to materially impair a building’s ability to remain
upright. Considering the Policy as a whole, we conclude that
“substantial impairment of structural integrity” means the substantial
impairment of the structural integrity of all or part of a building that
renders all or part of the building unfit for its function or unsafe
and, in this case, means more than mere settling, cracking, shrinkage,
bulging, or expansion.
This means that in Washington, a building can merely be structurally
unsafe and does not necessarily have to be on the verge of falling down
in order to meet the definition of collapse.
1 Queen Anne Park Homeowners Assoc. v. State Farm Fire & Casualty Co., Case No. 12-36021 (9th Cir. June 18, 2015).
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ORLEANS – 
