Q:

Does my insurance policy provide collapse coverage?

A:

Most property insurance policies cover “collapse,” but in the past ten years most policies define collapse as “an actual falling down” of some portion of a building.

Q:

So, if the building has not fallen down, then how is it possible to recover on a collapse claim?

A:

Most policies issued before 1999 cover “collapse,” or the “risk of collapse” and do not define collapse.  Court have interpreted these policies to cover “substantial structural impairment” or “substantial impairment of structural integrity,” which means that a beam, stud, or sill plate is decayed to the point that it lacks the strength required by code to withstand high-winds and earthquakes.

Q:

What is the most main difficulty in recovering on a collapse claim?

A:

The biggest challenge is proving that a “collapse” occurred prior to 1999: far enough back in time to trigger coverage under the policies that do not define a “collapse.”  A structural member that was in a state of collapse by 1999 will be very severely decayed today.

Q:

What are the other challenges?

A:

Even pre-1999 policies only cover “hidden” decay, as opposed to decay that is visible.  Once decay becomes visible you must file a lawsuit within one year (or two years) depending on the policy.

Q:

How do I know if my Association has a valid collapse claim?

A:

You need to find copies of your insurance policies dating back as far as possible.  In general, the older the policy the better the coverage.

Q:

How do I find copies of the Association’s insurance policies?

A:

Most Associations do not have copies of their insurance policies.  Normally the best we can do is to find policy numbers by examining the Association’s records related to prior insurance claim.  If you work with an insurance broker, then the broker can be a great resource to help identify policy numbers.

Q:

How do we start a claim?

A:

If your Association has recently discovered severe decay that may be covered, then Stein, Flanagan, Sudweeks & Houser will review your records free of charge and attempt to determine which insurers may have insured your Association.  If Stein, Flanagan, Sudweeks & Houser locates policies (or policy numbers) which we believe may provide coverage, then we will file a claim for your Association on a contingent basis (for a percentage of your recovery).

Q:

Are there are other insurance claims that we can pursue?

A:

Investigating collapse claims often lead to other claims that are potentially even more valuable to the Association.  Some policies cover other “code upgrades” required by the City at the time when you repair collapse conditions.  Other policies cover “water damage” to exterior walls.

Q:

 Is there any downside to making a claim, even if we lose?

A:

 Once you receive a report from your engineer regarding the decay damage, then you have an obligation to make that report available to unit purchasers along with a re-sale certificate.  But if you already know about decay then you should be disclosing it anyway.