Community Garage hired a construction firm to install temporary shoring to support the roof and prevent further damage.

All of the building's walls remained standing, and, although the roof sagged, it also remained intact. The building, however, could not safely be occupied until repairs were completed.

Community Garage made a claim for the cost of repairs to its building under the property, casualty, and liability insurance policy it had obtained from Auto-Owners Insurance Company.

The insurer denied the claim on the ground that the damage was not a covered “collapse” under the terms of the policy, and Community Garage sued.

The trial court ruled in favor of Auto-Owners, and Community Garage appealed. It argued that the damage to its building qualified as a “collapse” within the meaning of the Auto-Owners policy because the roof had abruptly caved in.

The Auto-Owners Insurance Policy

The Auto-Owners insurance policy provided:

D. ADDITIONAL COVERAGE – COLLAPSE

The coverage provided under this Additional Coverage – Collapse applies only to an abrupt collapse as described and limited in D.1. through D.7.

1. For the purpose of this Additional Coverage – Collapse, abrupt collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.

* * *

3. This Additional Coverage – Collapse does not apply to:

a. A building or any part of a building that is in danger of falling down or caving in;

b. A part of a building that is standing, even if it has separated from another part of the building; or

c. A building that is standing or any part of a building that is standing, even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage, or expansion.

The appellate court affirmed.

In its decision, the appellate court explained that subsection D(1) of the policy defined a collapse as “an abrupt falling down or caving in of a building or any part of a building” such that it “cannot be occupied for its intended purpose.” The appellate court added that subsections D(3)(b) and (c) “expressly exclude[d] from coverage” any structure or part of a structure that remained standing, even if it had “separated from another part of the building” or had sustained “cracking, bulging, sagging, bending, [or] leaning. . . .”

The appellate court then found that, although one of the walls of the Commercial Garage building bulged outward and the roof sagged, “they nonetheless remain[ed] intact.”

Although the roof was in imminent danger of caving in if the shoring were removed, the appellate court said, subsection D(3)(a) excluded from coverage any part of a building that simply was “in danger of falling down or caving in.”

Accordingly, the appellate court rejected Commercial Garage's argument that the damage to its building constituted a “collapse” within the meaning of the Auto-Owners policy.

The case is Community Garage, Inc. v. Auto-Owners Ins. Co., No. 339300 (Mich. Ct.App. June 19, 2018).