Collapse Loss or Wet Rot Loss?

Q

A church we insure recently suffered a collapse loss. The roof collapsed due to rotten timbers, and blew out two walls at the same time. The building is a total loss. The engineering report concluded that the “roof was at the end of its serviceable life.” It also found that many of the framing elements were rotten and vermin infested. Obviously, the roof collapsed because of the weakened timbers.

The policy is an old SMP form, MP-101. It promises to cover “all risks of direct physical loss,” subject to certain exclusions. It does not set “collapse” apart as an additional coverage. Wet rot and vermin are both excluded perils; however, the policy promises to pay for any ensuing loss that is not excluded.

The insurer has denied the claim, stating that the cause of the loss was the wet rot and the vermin. We disagree. We believe that the cause of loss was the collapse of the roof.

May we have your opinion?

North Carolina Subscriber

A

The insurer owes for all of the damage done by the collapse—to the building and to the business personal property. Since collapse is not excluded nor set off as a separate coverage, it becomes a peril.

The wear and tear, rot, vermin, etc., exclusion applies only to those pieces of the structure that actually had the problem. Once the ensuing covered collapse happened, the rest of the damage is covered.

The purpose of the exclusion is as follows: if, one day prior to the collapse of the roof, the church board was doing an inspection of the property and found that the timbers, supports, etc. were rotten and vermin-infested, they could not then turn to their insurer and expect the insurer to pay to replace the rotten timbers. That is a maintenance item, and rightfully should be paid by the property owner. However, the rotten timbers caused a covered loss—the collapse of the roof. Therefore, all damage done by the collapse is covered.

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