“Chance favours the prepared mind.”
― Louis Pasteur
You better have an expert for a collapse case.
One thing is for sure, collapse coverage claims are fact specific and the exact language within the policy is crucial in determining whether the damage at the building will be covered. Counsel also needs to be very familiar with court decisions of a particular jurisdiction to understand how the courts decide these cases. My prior posts have explained the evolution and two main views of the coverage. The traditional view holds collapse is covered when there is either a falling down or a caving-in – into a flattened form of rubble. But the liberal view holds a collapse happens when there is a substantial impairment of structural integrity, without an actual collapse of the building or part thereof being necessary.
More posts about the background of collapse coverage will be coming soon because there can be such a sharp contrast into what is covered, but documenting damage and recognizing the importance of getting an expert is the focus of this post.
When making a claim for a collapse loss it is very important that the nature of the loss and damage be shown to those who will decide on whether there is coverage or a payment due the policyholder. This means you must be able to present and explain the nature of the loss or damage to the Jury!
Photos, Photos. Photos
I can’t think of a time when representing a policyholder that we had too many photos. I can think of some standout cases where I wish we would have had more photographs. Some adjusters think they take a lot of photos, but when the case turns on one small, particular area of the building, what seems like plenty is not enough.
Photos of the collapse damage areas are necessary, as are comparison photos of the building before the loss. The policyholder needs to be taking pictures of the property in good condition and saving these photos in a safe place. Both types of photos will help the jury see exactly what everyone is talking about in the courtroom. Photos can be used to show the building has been materially damaged and illustrate the actual damages sustained.
Retaining an expert in a collapse case can be crucial to explain how the collapse happened and the causation. The insurance company is going to hire an expert, often a structural engineer, but someone trained in collecting soil samples or soil borings may also be used by the insurance company. Policyholders should also have experts who can testify about the causation of the building damages, and how to repair the building.
If the policy has an exclusion for earth movement or settlement, many carriers will use this as a basis to not pay a collapse claim. The carrier will use the soil samples to try and convince a jury the problem was settlement related.
Learning from the past
Consider the case of La Salle Nat. Bank of Chicago v. American Insurance Company,1 where the insurance company hired two experts: Even Vey, Phd., who held a doctorate in engineering specializing in soil mechanics and engineering, along with Raymond Flood, a professional engineer, who tested the soil 29 feet deep. The policy provided collapse coverage but excluded settling. The property was a one-story commercial building located in Addison, Illinois. During the term of the policy the southwest portion of the building sustained damages consisting of cracked walls, sinking floors, cracked and sagging ceilings, distorted lintels, the shifting of overhead beams, and the shifting of sinks and urinals mounted on walls.
In the La Salle case, the insured lost because the policy required a collapse be sudden and accidental, but the sole testimony in this case came from the two insurance company experts who said the problem was long term.
Raymond J. Flood, a professional engineer, conducted soil borings at the premises, and testified that two borings, each to a depth of 29 feet, were made. Both borings produced similar findings: proceeding downward from ground level, the first 7 1/2 or 8 feet were clay fill capable of supporting 2000 to 5000 pounds per square foot and termed tough; the next 3 1/2 feet were of brown peat and organic material capable of supporting less than 600 pounds per square foot and termed very soft. The next 4 to 8 feet were organic silt also termed very soft; and the deepest level was gray clay ranging from soft to very tough. The moisture content of the two middle levels of soil was extremely high
Doctor Even Vey, a doctor of engineering specializing in soil mechanics and foundation engineering and a professor at the Illinois Institute of Technology, also testified for defendant. On the basis of a personal examination of the premises and the results of the soil borings, he had an opinion that the damage to the building was caused by a settling of the ground level resulting from a consolidation of the underlying soil between a depth of 8 and 19 1/2 feet..
Defendant initially contends that the proof adduced at trial established, as a matter of law, that the damages were ‘caused by * * * settling * * * of * * * foundations, walls, floors, or ceilings’ within the meaning of those terms in exclusion (p) of the policy. Plaintiff, maintaining that the damage did not fall within this exclusion, asserts that the evidence sufficiently established that the damage resulted from a sudden collapse. We must agree with defendant.2
The Court specifically explained why the policyholder lost in this case:
The evidence revealed that, in terms of soil mechanics, the building had an unstable base. The middle layers of the structure’s supporting ground were quite soft and very moisture laden. Admittedly, the damage arose from a sinking of the floor in the southwest portion of the building. From the evidence adduced at trial, particularly the uncontested results of the soil borings and the testimony of the single expert witness qualified on the subject, the only permissible conclusion is that such sinking was caused by a ‘settling’ within the meaning of the pertinent exclusionary provision in the policy.
Plaintiff’s argument that the damage was caused by a ‘collapse’ does not affect this conclusion. It is not at all clear that characterization of the instant sinking as a collapse would operate to bring the loss within the policy since the underlying cause of such collapse would still be a settling of the supporting soil and with it, a portion of the building’s *1032 foundation and floors. Furthermore, there was no collapse in the instant case. Illinois law has determined that the expression ‘collapse’ has a distinctive meaning requiring that the loss be sudden and that the structure’s basic character be lost. See Rubenstein v. Fireman’s Fund Ins. Co. This did not occur in the present case.3
The La Salle collapse case happened a long time ago in Illinois, but the lessons learned from this case apply to all cases in every location. Make sure you have an understanding of the nature of the loss that you can easily explain to others. Photographs and expert testimony provide powerful evidence that can make or break a case.
1 La Salle Nat. Bank of Chicago v. Am. Ins. Co., 14 Ill. App. 3d 1027, (Ill. App. Ct. 1973).
2 Id. at 1030-31.
3 Id. at 1031-32.