Question: One of our clients recently took delivery of some heavy equipment and asked if there would be coverage for his property if the floor collapsed. Our client is the tenant, not the building owner. The coverage form is the (insurer’s) Special Property Coverage Form, which we believe is the same or almost the same as the corresponding ISO form. I have attached a page from the (insurer’s) policy. Coverage is clear with respect to building damage for collapse caused by weight of people of personal property, but I can’t make sense out of the personal property wording. Do you feel that personal property owned by a tenant of a building would be covered if the building were to collapse due to weight of personal property?
Answer: I do not think this policy will cover damage to your client’s equipment caused by a collapse. There is a very significant difference between the language in this policy and the language in the ISO Causes of Loss – Special Form. Here is what this policy says:
"We will pay for direct physical loss or physical damage caused by or resulting from risks of collapse of a building or any part of a building that is insured by this policy caused only by one or more of the following…”
And here is what ISO says:
“We will pay for direct physical loss or damage to Covered Property, caused by abrupt collapse of a building or any part of a building that is insured under this Coverage Form or that contains Covered Property insured under this Coverage Form, if such collapse is caused by one or more of the following…”
ISO’s form will pay for damage to covered property caused by the collapse of a building that contains covered property insured under the form. The insurer's form does not say anything about insuring a collapse of a building that contains covered property. It states only that it covers damage caused by the collapse of a building insured by the policy. To me, this means the following:
Was covered property damaged by a collapse? Yes
Was the damage caused by the collapse of a building insured by this policy? No
Result: No coverage
If the insurer had intended the collapse coverage to be the same as the ISO form’s, it would have used ISO’s language in its entirety. Much of the rest of the wording is identical to ISO’s. I can only conclude that the intent is to not cover damage to property caused by the collapse of a building that is insured under another policy.
I hope the underwriter will consider endorsing the policy to remove this coverage gap. Your client is obviously concerned about it.