A

The BOP form BP 00 02 would provide coverage for the situation as you describe it. The form includes coverage for collapse of a building or any part of a building insured under the policy if it is caused by, among other things, hidden decay—and you say the collapse was caused by hidden decay (rust).

The fact that there is an exclusion for decay and deterioration elsewhere on the policy contradicts the affirmative coverage provided for the specific peril of collapse. At the least, there's an ambiguity that should be interpreted in favor of the insured.

The detail that I would want to be certain of is that the pipe actually collapsed because of hidden decay. From your description, it must be a metal pipe, since the plumber stated it had rusted. However, if it were terra-cotta or PVC, it is doubtful that decay would have caused the collapse. This is important because the collapse coverage on BP 00 02 does not include settling, cracking, shrinkage, bulging, expansion, etc. So, be sure that the pipe didn't just settle or crack. If that were the case, no coverage. But, if it's hidden decay (rusting), it should be covered. (Unlike the commercial property form, the BOP form in question does not exclude underground pipes, flues, or drains from the definition of covered property.)

Business income coverage under the BOP also would be triggered as long as the loss arises from such a covered peril.