Legal Updates for Coverage and Bad Faith
Edited by Allison L. Krupp, Esq.
Connecticut Second Circuit Enforces Clear Policy Language Limiting the Extent of Collapse Coverage for Cracking Basement Walls
A panel of the Second Circuit Court of Appeals has ruled per curiam in Valls v. Allstate Ins. Co., 2019 U.S. App. LEXIS 9596 (April 2, 2019) that the additional coverage for collapse in Allstate’s homeowner’s policy did not provide coverage for cracks in basement walls even if the structural integrity of the building was substantially impaired.
The panel described the case as presenting a single question: Whether the “collapse” provision in the Allstate homeowner’s insurance policy affords coverage for basement walls that exhibit significant cracking but remain standing.
The insurance policy did not define “collapse,” but limited the collapse coverage to the entire failure of all or part of a covered building structure. The coverage was further limited to sudden and accidental direct physical loss caused by certain enumerated causes, including hidden decay of the building structure and defective materials used in construction. Collapse specifically did not include cracking, shrinking, bulging or expansion.
The insured argued that interpretation of the policy’s collapse provision should be governed by Beach v. Middlesex Mutual Assurance Co., 205 Conn. 246, 532 A.2d 1297 (1987). Beach held that the undefined term “collapse” should encompass “substantial impairment of the structural integrity of a building.” The Second Circuit panel easily distinguished Beach because the policy in Beach did not define or otherwise qualify the term “collapse.” Allstate, in contrast, expressly qualified coverage for collapse by requiring that a covered collapse be “entire,” “sudden” and “accidental.” The panel noted that the Connecticut Supreme Court had interpreted “sudden” in an insurance policy to include the temporal meaning of abruptness or brevity. Buell Indus., Inc. v. Greater New York Mut. Ins. Co., 2549 Conn. 527, 540-541, 791 A.2d 489 (2002). Gradual cracking of the basement walls was not sudden. Nor could cracking of the basement walls encompass an “entire” collapse, since “cracking” was expressly excluded from the collapse coverage. The court noted that a collapse can be sudden even if the underlying cause of the failure is gradual.
The Second Circuit panel’s opinion recognized that Connecticut law defines “collapse” as a substantial impairment of the structural integrity of a building and applies only if the term is not otherwise defined or qualified by the policy language. The Second Circuit panel enforced the clear policy language limiting the extent of coverage for collapse. The panel’s opinion is also notable for its decision to not certify the question to the Connecticut Supreme Court based, significantly, on the fact that Allstate had exercised its right to remove the case from state court and objected to certification. The panel respected Allstate’s constitutionally-recognized interest in not being put back in state court through the process of certifying a question to the Connecticut Supreme Court.
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