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Allstate’s “Collapse” Provision is Sturdy on Appeal (NY)
April 3, 2019
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The Second Circuit recently ruled, across three similar cases, that the collapse provision within an Allstate Insurance Co. policy doesn’t cover the cost of fixing cracking in a home’s basement walls due to a defective concrete foundation. This ruling affirmed a lower Court’s decision to deny coverage to three Connecticut homeowners.
Three cases filed by Allstate Policy Holders were the first of their kind to reach the federal appellate court. The basis for the lawsuits were Allstate’s denial of coverage pursuant to a clause that disclaims coverage for incidents that stem from faulty concrete used to pour the foundations for thousands of homes in Connecticut. Those homes foundations are now slowly collapsing and the cost of repair is significant.
A panel of the Second Circuit held “the collapse provision in the Allstate homeowner’s insurance policy at issue here does not afford coverage for basement walls that exhibit signs of deterioration but that have not collapsed suddenly, accidentally, and entirely, as required by the policy.”
The cases are <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/04/valls-v-allstate.pdf">Valls v. Allstate Insurance Co.</a></em>, case number 17-3495; <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/04/carlson-v-allstate-1.pdf">Nancy E. Carlson et al. v. Allstate Insurance Co.</a></em>, case number 17-3501; and <a href="https://www.wcmlaw.com/wp-content/uploads/2019/04/lees-v-allstate.pdf"><em>Alan D. Lees et al. v. Allstate Insurance Co</em>.</a>, case number 18-007, all in the U.S. Court of Appeals for the Second Circuit. The cases serves as a reminder to homeowners and brokers to carefully read a policy of insurance during the procurement process, and the bring potential issues regarding concerning clauses to light with the broker or carrier before agreeing to the policy. Easier said than done, but here, the exclusionary language in the policy was clear. Thanks to Jon Avolio for his contribution to this post. Please email <a href="mailto:bgibbons@wcmlaw.com">Brian Gibbons</a> with any questions.