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.