Every business owner should anticipate some property damage at some point. While events like fires, floods, hail, and strong winds are expected, a total building collapse can be entirely unexpected if proper maintenance and building protocols aren’t followed.
Knowing the insurance coverage options available to commercial property owners for this damage can help give them peace of mind. At Raizner Slania, our Board-Certified insurance coverage lawyers understand the insurance claims process from start to finish. They can help you hold your insurance company accountable should they employ bad faith tactics to deny, delay, or vastly underpay your claim.
Why do Building Collapses Happen?
When a building collapses, it can be incredibly devastating. Not only is the structure completely demolished and unusable, but many lives can also be lost. Because these instances are so unfortunate, it’s important to understand how and why they happen.
Some of the most common causes of a building collapse include:
Design or Construction Flaws
A building must be designed to withstand natural forces and to handle heavy weight; however, a faulty foundation can be an incredibly dangerous design flaw. If the foundation is defective or there are irregularities within the design or construction of the building, excessive weight placed on the structure will likely cause it to collapse.
Deterioration Over Time
As buildings age, they can slowly deteriorate if not well maintained. A poorly maintained building can easily collapse if deterioration persists.
Structural Damage and Inferior Building Materials
When not done carefully, construction and renovation projects can affect a building’s integrity. Damage to the foundation or overall structure can cause a collapse. Additionally, if faulty or poor building materials are used during construction, the building can easily collapse over time.
Heavy Machinery
During the construction or demolition of a building, the weight of heavy machinery can cause it to collapse. A mistake by a worker operating heavy machinery can cause structural damage that contributes to a building’s collapse.
Commercial Property Insurance for a Building Collapse
Coverage can be ambiguous when it comes to insurance for a building collapse. This is because it ultimately depends on the cause of the collapse and whether the property owner was aware of structural damage that could result in a collapse. If the commercial property owner knew of structural wear and tear or if the building was not adequately maintained, a sudden collapse would likely be excluded.
According to the Insurance Services Office (ISO), specific causes of a building collapse exclude coverage entirely. Coverage is excluded from the collapse of a property or part of a property due to an abrupt falling or caving in of the structure, loss of structural integrity, or any cracking, bulging, sagging, bending, leaning, settling, shrinkage, or expansion.
Despite this, it’s important to note that there are three exceptions to these exclusions, including:
- If the collapse results in a covered cause of loss at the location, the loss or damage caused by that ensuing cause of loss is covered.
- If the collapse is covered by additional coverage, which can include abrupt collapse due to specific named perils like unknown building decay that is hidden from view, insect or vermin damage that is hidden from view, and the use of defective materials or construction defects if the collapse occurs after the construction has been completed.
- If it is caused by a specified cause of loss, such as the breakage of building glass, the weight of rain on the roof, or the weight of people or property. The specified cause of loss can also pertain to fire, lightning, explosion, windstorm, hail, smoke, riot or civil commotion, vandalism, sinkhole collapse, falling objects, the weight of snow, ice, water, and/or water damage.
Despite these exceptions, additional coverage does not apply to a building or any part of a building that is in danger of falling or caving in (it must be abrupt). Additionally, coverage does not apply to a part of a building still standing, even if it has separated from another part of the property. Lastly, it does not apply to a building that is standing or any part of a building that is standing, even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage, or expansion.
Covered Types of Building Collapse
Although obtaining insurance coverage for a building collapse can be difficult, there are some instances where an insurer may be inclined to offer coverage. These include:
Structural Damage
In some cases, outside events can cause severe damage to a property’s structure, leading to a partial or total collapse of the building. For example, a fire could cause parts of a business to collapse if they are incinerated. In other instances, windstorms and hail can also result in collapse events. All of these could lead to the coverage of a collapse claim. However, the insured must prove they took reasonable steps to mitigate the damage before the collapse occurred.
Hidden Decay
Unfortunately, every man-made structure has an expiration date, leading to property decay over time. As a building decays or presents evidence of dry rot, it threatens the property’s structural integrity. While many insurance providers will cover a building collapse related to hidden decay of the property, owners must prove they had no prior knowledge of it. Insurers will use any suspected knowledge of the decay before the collapse to deny coverage.
Hidden Damage from Insects
Infestations of insects or vermin can present significant challenges for business owners. A termite infestation can destroy floorboards and sometimes result in a building collapse. This can be incredibly costly to fix; however, insurance providers typically honor these specific claims. Despite this, as with hidden decay, the insured will need to prove they had no prior knowledge of the infestation at the time of the collapse; otherwise, it will be attributed to the property owner’s negligence.
Sinkhole Collapse
A sinkhole collapse occurs when the land underneath the property suddenly gives way, causing the building to sink into the ground. Sinkhole coverage is often included in most commercial property policies; however, it is typically policy-specific. Business owners must thoroughly review their commercial coverage to ensure a sinkhole event is covered; otherwise, they must purchase additional coverage.
Texas Commercial Property Insurance Claims Attorneys
Commercial building collapses are incredibly devastating. While insurance coverage options are available for such occurrences, many stipulations and exclusions must also be considered. Because commercial insurance policies are often extremely nuanced, an experienced insurance coverage attorney should review the policy language to ensure available coverage. At Raizner Slania, our attorneys are well-versed in deciphering policy language and the many tactics insurance companies use to delay or deny valid claims. Contact our office today to see how we can best assist you.