North Carolina Subscriber

We believe the loss is covered. The insurer states there is no coverage for faulty or inadequate design, materials, etc.; however, the prefacing language to this exclusion states that any ensuing loss not otherwise excluded is covered. “Collapse,” an additional coverage, is thus a covered cause of loss. “Collapse” coverage applies to the use of defective material or methods if the collapse occurs during the course of construction, and also to a collapse occurring after the construction is complete. In this instance, the collapse coverage is triggered “in part by a cause of loss listed in 2.a. through 2.e.”, adding “we will pay for the loss or damage even if use of defective material or methods, in construction…contributes to the collapse.” “Decay that is hidden from view” is cause of loss 2.b.

In the case of Stamm Theatres, Inc. v. Hartford Casualty Ins. Co., 93 Cal. App. 4th 531 (2001) the court found coverage when a theater ceiling collapsed, noting that the “dictionary definitions of 'decay' include a general sense of gradual deterioration in strength or soundness, and a more specific sense of rot or organic decomposition. This case presents the question whether a property insurance policy covering collapse of a building due to 'hidden decay' applies to the unexpected failure of wooden roof trusses, with no evidence of rot. We conclude that coverage cannot be ruled out merely because the trusses were not rotten. An insurer promising coverage for collapse due to 'hidden decay,' without limiting the scope of the term to organic decay, is liable on claims for any collapse caused by a concealed process of gradual loss in the strength of building materials, unless other policy terms limit coverage.”

And that is what happened here. There has been a gradual loss of strength, which was concealed, in the system. This is an accepted meaning of decay. So, after a while, the ceiling support system lost its ability to support the weight of the ceiling, and the ceiling collapsed.

As to the report stating that earth movement or settlement could trigger a collapse, these are exclusions that the insurer must proved occurred in an open perils policy. It is not enough to state something could happen; the insurer must prove it did happen.