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Published: Dec. 28, 2020, 4:13 p.m.

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How to Deal with a Claim that a Property Collapsed or Collapse was Imminent

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https://zalma.com/blog

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A collapse is a sudden or relatively abrupt occurrence causing serious structural damage, and not a gradual occurrence over a period of time:

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[A] homeowners insurance policy will most likely provide \\u201ccollapse\\u201d coverage for \\u201cany serious impairment of structural integrity\\u2026\\u201d Consequently, the term \\u201ccollapse,\\u201d in its plain, common and ordinary sense \\u201cmeans a falling down, falling together, or caving into an unorganized mass.\\u2019 

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In Rosen v. State Farm General Insurance Co., 30 Cal.4th 1070, 70 P.3d 351, 135 Cal.Rptr.2d 361 (Cal. 06/12/2003), the California Supreme Court reversed the Court of Appeal\\u2019s choice to not enforce a clear, unambiguous, and explicit policy clause because it found the existence of \\u201can overriding public policy that mandates such coverage. In reversing the dangerous Court of Appeal decision, the Supreme Court refused to follow the so-called \\u201cpublic policy\\u201d basis for the Court of Appeal\\u2019s decision to compel coverage because such logic, without restraint, would allow courts to convert life insurance into health insurance. Re-writing the coverage provision to conform to their subjective notions of sound public policy, \\u201cthe trial court and the Court of Appeal exceeded their authority,\\u201d disregarded the clear language of the policy, and the equally clear holdings of the Supreme Court.

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To rewrite the provision imposing the duty to indemnify in order to remove its limitation to actual collapse would compel the insurer to give more than it promised and would allow the insured to get more than it paid for, thereby denying their freedom to contract as they please. 

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The Washington state Supreme Court, answering an inquiry from a U.S. District Court, concluded that rather than adopt a fixed definition of \\u201ccollapse\\u201d for all insurance contracts, it would apply Washington law to interpret the ambiguous term \\u201ccollapse\\u201d in the insurance contract before the Ninth Circuit. The Supreme Court concluded \\u201cthat in the insurance contract, \\u2018collapse\\u2019 means \\u2018substantial impairment of structural integrity.\\u2019 \\u2018Substantial impairment of structural integrity\\u2019 means substantial impairment of the 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 and, under the clear language of the insurance policy here, must be more than mere settling, cracking, shrinkage, bulging, or expansion.\\u201d

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