Recently, Connecticut has had an increase in insurance claims for crumbling foundations due to faulty foundations poured in the 1980s and 1990s. Some foundations poured during this time frame contained a mineral, pyrrhotite, which can cause cracking when it reacts with oxygen and water. It is estimated nearly 20,000 foundations poured contain the mineral.

The problem many policyholders are encountering is the collapse provision in their insurance policies. Typical policy language defines collapse as “an abrupt falling down or caving in of a building or any part of a building”; contrasted with language in the same policy: “a building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.” These apparently conflicting definitions of collapse arise from the conflicting meaning of the term “collapse” as it has evolved in court cases from the various states. The traditional view defined collapse as a falling down or caving in, and the liberal view allowed for a substantial impairment of structural integrity without an actual collapse. In addition to this, some homeowners are burdened by a “sudden” clause, where the collapse must be sudden to be covered, and the deterioration of a foundation occurs over time.

Connecticut has requested that insurance companies work with their insureds in good faith, and requested they join Connecticut’s “Crumbling Concrete Assistance Program,”—a relief fund for homeowners. If you are a Connecticut policyholder dealing with a foundation issue, Connecticut recently passed a law sealing complaints filed with Connecticut’s Department of Consumer Protection, and other state agencies, to protect homeowners worried filing such a complaint might harm any subsequent claim with the insurance company.

  • Frank Lombard

    While most of the attention on these claims have been focused on the “collapse” limitation, I question if the “ensuing loss” exception to the “faulty material” exclusion would apply.

    Most of the homes have sustained structural damage as a result of the “defective material”. It would appear the policy should extend coverage to cover this “ensuing” damage.

    In addition, policyholders are required to take reasonable steps to protect their property from further damage. I submit “reasonable steps” would include the cost of raising the structure so the defective material (foundation) can be replaced.

    Shouldn’t this be part of the “crumbling foundation” conversation?