Tred R. Eyerly | Insurance Law Hawaii
The Vermont Supreme Court reversed the trial court’s decision for collapse coverage. Commercial Constr. Endeavors, Inc. v. Ohio Sec. Ins. Co., 2019 Vt. LEXIS 173 (Vt. Sup. Ct. Dec. 13,2019).
Commercial Construction Endeavors, Inc. (CCE) built a livestock barn. By late December 2014, the barn was partially complete, with the foundation laid, wood framing erected, and roof trusses installed. In late December, strong winds caused the structure to collapse. CCE started clearing debris and rebuilding the barn, incurring additional labor and material costs.
CCE reported the collapse to Ohio Security. The policy covered loss to “Covered Property.” Ohio Security determined that the loss was covered for “Off-Premises Property Damage Including Care, Custody or Control.” This endorsement provided coverage for damage to real property upon which CCE was performing operations where the damage resulted from those operations. Ohio Security paid CCE $24,750, the full amount available under the endorsement, less a $250 deductible.
CCE asserted that coverage was also available under the “Property Floater Coverage Form.” The floater provided additional coverage for collapse, including loss caused by:
a. Windstorm . . . as covered in this Coverage Form
. . .
f. Use of defective materials or methods in construction . . . if the collapse occurs during the course of the construction. . .
Ohio Security determined there was no coverage under the floater, advising that “the poClicy does not provide coverage for materials after they have been installed into the building project under the Property Floater Coverage.” CCE sued Ohio Security for breach of contract, contending additional coverage was due.
The trial court found the barn was real property, not business personal property, but denied Ohio Security’s summary judgment motion because the policy was ambiguous. The court, however, did grant summary judgment to Ohio Security on the debris removal coverage.
The Supreme Court considered whether the use of the term “Covered Property” in some portions of the floater – but not in the additional collapse coverage subsection – created an ambiguity, requiring the conclusion that additional collapse coverage was not limited to “Covered Property,” i.e., business personal property. There was no dispute that “covered Property,” as defined in the floater, was limited to business personal property. Nor was there a dispute that the collapsed barn was not business personal property.
Because elsewhere in the policy it stated that Ohio Security would pay only for “loss to Covered Property,” the collapse coverage section was unambiguous. The only reasonable interpretation of the floater was that the limitation expressed as to “Covered Property” applied equally to all subsections, including the Additional Coverage-Collapse section. The additional collapse coverage applied only to “Covered Property,” which was business personal property. CCE did not dispute that the barn was not business personal property and thus was not “Covered Property.” Therefore, the court’s summary judgment ruling was reversed.
Further the debris removal was also not a loss involving business personal property. Therefore, it was not a loss to “Covered Property.” The lower court’s ruling that there was no coverage for debris removal was affirmed.