Insured Must Prove that Facts of Loss Fall Withing Grants of Coverage
People who buy insurance do not usually understand that it is the obligation of an insured to prove to the insurer that there is a loss and that the loss is due to a peril insured against and not excluded. This lack of understanding became evident when the case of Ravinia Vogue Cleaners v. Travelers Casualty Insurance Company of America, Case No. 16-cv-10311, United States District Court for the Northern District of Illinois Eastern Division (July 24, 2019) was brought before the US District Court for decision.
Ravinia Vogue Cleaners sued Travelers Casualty Insurance Company of America alleging breach of contract and unreasonable conduct for violating the parties’ insurance agreement.
Travelers issued an insurance policy to Ravinia Cleaners (“the Policy”) covering property damage, effective from July 7, 2014 to July 7, 2015. The Policy provided coverage to a building in Highland Park, Illinois where Ravinia Cleaners operated its dry-cleaning business. The Policy included certain exclusions to which it would not provide coverage for damage or loss. One of the exclusions to coverage was from damage relating to a “collapse of buildings.” The Policy defined collapse as: “[A]n abrupt falling down or caving in of a building or any part of a building with the result being that the building or part of a building cannot be occupied for its intended purpose.”
However, the Policy allowed for certain exceptions to this exclusion, such as the exclusion of coverage was when the “collapse” was caused by, as relevant here: “(1) weight of snow or (2) use of defective materials or methods in construction, remodeling or renovation if the collapse occurs after construction, remodeling, or renovation is complete . . . .”
The Policy also states that a building that “is in imminent danger of abruptly falling down or caving in” or “suffers a substantial impairment of structural integrity” is not a “collapse” but rather is in a “state of imminent collapse.”
Ravinia Cleaners reported that there was a leak coming from the ceiling. Travelers sent a claims inspector to evaluate the damage but the local Chicago area snow and ice damning prevented him from inspecting the roof. That same day, construction workers put temporary “shoring” in place on the ceiling.
Ravinia Cleaners reported to Travelers that there was damage to the roof on February 25, 2015. Travelers hired an engineer to perform an inspection on March 4, 2015. In the report memorializing the inspection, the engineer made the following observations: “The roof was covered with ice and snow at the time of our site visit. At the area of the truss failure, the barrel vault roof was visibly displaced downward. A diagonal bracing member located near the peak on the south side of the failed bow string truss was detached and is laying on the ceiling joists. The top cord on the east and west ends of the truss to the north of the failed truss has started to buckle similar to the failure mode of the failed bowstring truss. At the time of our site visit, water was dripping from the failed area of the roof structure. As a result of the unsafe condition of the roof, the building should be vacated and should not be occupied until adequate shoring is in place.”
Travelers informed Ravinia Cleaners that it was denying its claim on May 20, 2015. In its denial letter, Travelers asserted that coverage was excluded because the building (roof) was in a state of imminent collapse.
The construction of an insurance is policy is a question of law. The Court’s function is to understand and give effect to the parties’ intent as expressed in the contract.
Travelers asserted that the three weeks between the initial report of the leak and the report of the truss failure demonstrates that there was no “abrupt falling down or caving in” as the Policy defines “collapse.” Travelers also points to the temporary shoring that was put in place on February 6, 2015 which actually prevented the collapse.
Notwithstanding policy language stating the contrary, Illinois courts have described “collapse” under a homeowner’s policy as “the sudden impairment/undermining of a structure even if the structure has not completely fallen down.” See Travelers Home and Marine Ins. Co. v. Walsh, 2017 WL 976396 at *3 (N.D. Ill. Mar. 14, 2017) (Lefkow, J.) Here, however, the Policy distinguishes a building that has collapsed from one that is in a state of imminent collapse.
There can be no dispute that the language of the Policy is what controls the analysis of whether coverage applies to the imminent collapse of the building.
The exact terms of the report done by Travelers’ engineer (i.e. buckling truss, roof displacing downward) does not demonstrate a “collapse” because the Policy states that a building that suffers substantial loss to its structural integrity or is in imminent danger of falling down is not a collapse.
When reading the Policy as a whole, it is clear that the parties did not intend for the damage to be considered a “collapse” but rather that the roof and truss structure suffered substantial impairment and was in a state of imminent collapse.
For it to obtain coverage from Travelers Ravinia Cleaners must demonstrate that the damage resulted from the weight of the snow. Ravinia Cleaners put forth no evidence that the damage was caused solely by the snow.
Travelers’ engineer testified that the truss failure resulted from the weight of the snow along with a defective truss system which manifested its defects at least 10 years prior to the February 2015 snow. Ravinia Cleaners’ engineer, stated that something other than the snow, was “at play” in the cause of the damage. Without any expert evidence that the truss failure resulted from the weight of the snow, there are no material facts at issue as to whether the coverage exclusion applies.
The Policy excludes coverage from damage related to the building being in a state of imminent collapse unless caused by the weight of snow. Accordingly, Ravinia Cleaners has not shown that there is a genuine issue of fact for trial.
Travelers has, therefore, established that the exclusion to coverage applies and that it is entitled to judgment as a matter of law. Travelers’ motion for summary judgment was granted and the case was dismissed with prejudice.
Judge Sharon Johnson Coleman read the entire policy, applied the facts to the wording of the policy, considered the expert opinions presented to it, and concluded there was an “imminent collapse” but no actual collapse of the property. As a result the exclusion applied and Travelers motion for summary judgment was granted.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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