Home Owners Insurance Policy And Collapse

Do homeowner insurance policies cover a collapse of the home?  It sounds like a simple question but as is illustrated in a 2020, opinion from the Southern District of Texas, Houston Division, it is not as simple as it looks.

The opinion is styled, Beatrice Stewart v. Metropolitan Lloyds Insurance Company of Texas.  The case needs to be read to get the facts of the case, however, the facts end up being discussed in the relevant parts of the opinion discussed here.

Metropolitan insured Stewarts home.  Stewart experienced some structure problems with her home and turned in a claim to Metropolitan.  Metropolitan ultimately denied the claim stating there was no coverage under the wording of the policy.

Under Texas law, insurance contracts are interpreted under general rules of contract construction, and words and phrases contained therein should be given their plain and ordinary meaning.  The court interprets an insurance contract to effectuate the intent of the parties at the time the contracts were formed.

Coverage under the collapse provision of the contract turns on whether Stewart’s home, or any part of the home, “entirely collapsed.”  The policy states that it covers “sudden and accidental direct physical loss to covered property involving the entire collapse of a building or any part of a building.”

Metropolitan first argues that not only was there was no “entire collapse”; there was not even a “collapse” as the policy defines the term.  The policy defines “collapse” as “an abrupt falling down or caving in of a building or any part of a building”; a “collapse” is not “settling, cracking, sagging, bowing, bending, leaning, shrinking, bulging or expansion.”  Metropolitan argues that while some of Stewart’s flooring may have “sunken or sagged or become soft,” that is not an “abrupt falling down or caving in.”  Metropolitan points to its engineering report, which states that the “floor is unlevel throughout the house.”  Stewart admits that her “entire home did not collapse to the ground,” but she argues that part of the home “fell or caved in.”  According to Stewart’s testimony, she heard “a loud bang” while she was in bed, and the house was shaking. The engineering report also states that Stewart had “removed and replaced the soft subfloor decking and reinforced the floor joist” before the inspection.  The record does not show that any part of Stewart’s floor caved in.  There was no hole or gap in the floor; it sagged.

Nor does the undisputed evidence in the record show an “entire” collapse.  Case law provides some guidance on when there has been an “entire” collapse.  In another case the insured filed a claim after noticing that the floorboards in a corner of her living room were “giving way” and a window had fallen out of the wall.  The damage had been caused by fungus.  The insurer rejected her claim, and the insured sued.  The appeals court clarified the meaning of “entire collapse.”  The court explained:

For a building or a portion thereof to sustain an “entire collapse” must mean that it has entirely collapsed, that is “wholly,” “completely,” or “fully.” Put another way, to constitute an “entire collapse,” there must be a “total collapse.” It would make no sense to apply such a description to a collapse that was merely “imminent.”

Courts have found that cracking is not enough for an “entire” collapse.

Other courts have found “substantial impairment of the structural integrity of a building” that is “sufficiently comprehensive in scope” to be an entire collapse.  But here, Stewart’s policy defines the term “collapse,” so the court need not define it differently.

Stewart argues that in addition to the floor, there was damage to the joists, walls, doors, sheetrock, kitchen, and bathroom.  She asserts that this “clearly demonstrates that a part of the home fell in or caved in.”  But none of the damage to the walls, doors, sheetrock, kitchen, or bathroom involved any of those building parts “entirely” falling or caving in.  And although the record shows that some joists underneath the house had broken and fallen, the policy expressly excludes coverage for such foundation damage unless it is caused by a different collapse.   The fact that some joists abruptly broke and gave way would create coverage only if that damage was caused by another collapse.  This is not supported by the record.  The record does not show that Stewart’s floor, or part of the floor or house, entirely or totally fell or caved in.

At oral argument, Stewart argued that the word “entire” applies only to the collapse of a building but not to the collapse of part of a building.  This is unsupported by the policy language and is an unreasonable interpretation of the policy.  The additional coverage for collapse states that it covers damage “involving the entire collapse of a building or any part of a building.”  The word “entire” modifies “collapse,” which applies to the phrase “of a building or any part of a building.”  If “entire” did not also apply to “any part of a building,” neither would the word “collapse,” and the phrase “any part of a building” would be meaningless.  The policy covers damage caused by collapse to “any part of a building” only when there has been an entire collapse.

The undisputed record evidence shows that part of the floor sank and some floor joists underneath the house broke or cracked; some walls were not plumb with the floor and had cracks; and some doors were off their hinges.  Stewart describes the bathroom damage, stating that “the floor was sinking and the bathtub had fallen in,” and “the walls were leaning.”  This damage is similar to sinking and cracking that is not an entire collapse.  This damage is unlike part of a house entirely, totally, or completely falling or caving in.  The record does not show that the damage amounted to an entire collapse, and it is not covered under the additional coverage for collapse.

Metropolitan’s motion for summary judgement was granted.

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