In 401 Fourth Street, Inc. v. Investors Ins. Group, No. 270 MAP 2003, 2005 WL 1688324 (Pa. July 20, 2005), the Pennsylvania Supreme Court found coverage for damage caused by imminent falling down or falling down of a building and said that the policy was not limited to damages for the actual collapse of a building.

 

401 Fourth Street noticed a parapet wall in its building was bowed and leaning, so they filed a claim with their insurer, Investors Insurance Group. Investors denied the claim based on its engineer's report that “a lack of normal maintenance of the brick joints, roofing and shelf angle” caused the loss.

 

The Supreme Court was charged with determining if the loss could be considered a collapse under Fourth Street's policy. Investors argued that, as interpreted in Pennsylvania case law, “collapse” in insurance policies means the actual falling down of a wall, which did not happen in this instance. Fourth Street , though, stated that the undefined term “collapse” combined with the policy language “risk of direct physical loss involving collapse” is ambiguous.

 

The court turned its attention to the meaning and interpretation of the policy's phrase “risks of direct physical loss involving collapse,” and not the meaning of “collapse.” The court found that the phrase was susceptible to more than one construction.

 

The court said that the phrase suggested a broader meaning than just collapse and that “the policy language provides coverage that extends beyond the situation in which an insured's building falls to the ground, even in light of the traditional interpretation of the term 'collapse.'” The court therefore found the language ambiguous and construed in favor of the insured.