The insurer was unsuccessful in moving to dismiss the property owner's complaint that was filed after coverage for collapse of basement walls was denied. Cyr v. CCAA Fire & Cas. Ins. Co., 2017 U.S. Dist. LEXIS 39387 (D. Conn. March 20, 2017).
The Cyrs began observing cracking patterns in the basement wall of their home. A structural engineer inspected the wall and determined that the cracks were due to a chemical reaction in the concrete that would ultimately render the walls unstable. The Cyrs made a claim with CCAA under their homeowner's policy. The insureds contended that the progressive deterioration of the concrete in the basement walls was a collapse under the policy.
The claim was denied. The Cyrs sued for breach of contract, bad faith and violations of the Connecticut Unfair Insurance Practices Act (CUIPA) and Unfair Trade Practices Act (CUTPA). To support the bad faith claim, the Cyrs alleged that CCAA was aware of numerous claims in Connecticut regarding deteriorating concrete. CCAA was also aware of the problem through its participation in the Insurance Services Office, Inc. (ISO), which distributed information on the concrete problem. The Cyrs further alleged that CCAA attempted to deny coverage based on other purported exclusions, despite provisions within the policy that provided coverage for chemical reaction and collapse, for which there was no chemical reaction exclusion.
The Cyrs alleged that CCAA attempted to exploit their lack of sophistication by denying coverage on the basis of inapplicable provisions of the policy without regard to other provisions which afforded coverage for the specific event for which coverage was sought. Plaintiffs also claimed that CCAA violated the CUIPA because it regularly used the information obtained from the ISO to deny claims covered by its policies. Finally, the Cyrs alleged that despite specific chemical reaction and collapse provisions in its own policy which would afford coverage, CCAA attempted to deceive the policyholders into believing that the policy did not provide coverage.
The court found that such allegations were sufficient to survive a motion to dismiss.