In response to a certified question from the Ninth Circuit, the Washington Supreme Court recently found that collapse in a property policy means "substantial impairment of structural integrity." Queen Anne Park Homeowners Ass'n v. State Farm Fire & Cas. Co., 2015 Wash. LEXIS 695 (Wash. June 18, 2015).

    Queen Anne Park was a two-building condominium in Seattle that was insured by State Farm. The policy covered "any accidental direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following . . . (2) hidden decay." The policy further stated that "collapse does not include settling, cracking, shrinking, bulging or expansion." The policy did not define the term "collapse."

   The Queen Anne Park Homeowners Association (HOA) filed a claim with State Farm claiming the building had collapsed. An HOA engineer found hidden decay in some shear walls, which he opined had substantially impaired the walls' ability to resist lateral loads. State Farm conducted its own inspection, and concluded there was no loss due to collapse during the policy term. 

   The HOA filed suit. The district court granted summary judgment to State Farm. The HOA appealed to the Ninth Circuit, which certified a question of state law to the Washington Supreme Court:

What does "collapse" mean under Washington law in an insurance policy that insures "accidental direct physical loss involving collapse,"  . . . but does not define "collapse," except to state that "collapse does not include settling, cracking, shrinking, bulging or expansion"?

    The Washington Supreme Court noted that courts across the country had adopted different but reasonable definitions of "collapse" in policies. The range of reasonable definitions of "collapse" adopted by various courts demonstrated that the term was ambiguous. 

   Here, the insured requested that "collapse" be interpreted to mean "substantial impairment of structural integrity." The court largely agreed. This was a reasonable definition, most favorable to the insured. Based on the language of the policy, however, "collapse" had to mean something more than mere "settling, cracking, shrinking, bulging or expansion." Taken together, "substantial impairment" of "structural integrity" meant an impairment so severe as to materially impair a building's ability to remain upright. Therefore, "substantial impairment of structural integrity" meant the substantial impairment of the structural integrity of all or part of a building that renders all or part of the building unfit for its function or unsafe and, in this case, means more than shrinkage, bulging, or expansion.