Another Federal Judge Dismisses Lawsuit For Crumbling Foundation, But Some Relief May Be Forthcoming

Jason Cleri | Property Insurance Coverage Law Blog | January 9, 2019

I’ve previously written about the issues insureds are facing in Connecticut regarding crumbling foundations.

In a blow to insureds in Connecticut affected by crumbling foundations due to the infusion of pyrrhotite, a mineral which gradually deteriorates concrete when exposed to water and oxygen, the Federal District Court for Connecticut ruled that the insureds, Richard and Denise Hyde, did not prove their case to sufficiently to overcome Allstate’s motion to dismiss.1 The Hydes, who had been living at their property in Tolland for 18 years, decided it was time to sell. When they had an engineer inspect their property in anticipation of the sale, the pyrrhotite defect was discovered. The Hydes sued Allstate after the denial, claiming the policy language was ambiguous as to coverage.

The trial court dismissed the action on two grounds:

  1. The court noted that it did not believe an ambiguity existed in the policy language regarding what was considered “sudden and accidental.”
  2. Allstate argued, and the court agreed, that the gradual concrete decay was not sudden and accidental, nor did it qualify for coverage as an entire collapse. In addition, there were other policy exclusions, such as an exclusion for cracking walls, rust, and defective construction materials that precluded coverage.

As a silver lining to insureds, Gov. Dannel Malloy and State Attorney General George Jepsenannounced in a joint release that state had entered into a memorandum of understanding with Travelers Companies to assist current and former Travelers policyholders seeking financial assistance to remediate crumbling foundations.

Under the agreement, Travelers will establish and administer the voluntary Travelers Benefit Program and commit $5 million to the program in conjunction with an assistance program launching through the Connecticut Foundations Solutions Indemnity Company.

I leave you with a quote from author and life coach, Craig D. Lounsbrough, “[t]he thing that I’m most likely to collapse under is not the weight of the stresses that stand around me, but the ego that sits within me.”
1 Hyde v. Allstate Ins. Co., No. 3:18-cv-00031 (D.Conn. Dec. 4, 2018).

Crumbling Foundation and the Collapse Provision in a Homeowners Policy

Jennifer Van Voorhis | Property Insurance Coverage Law Blog | March 26, 2017

Recently, Connecticut has had an increase in insurance claims for crumbling foundations due to faulty foundations poured in the 1980s and 1990s. Some foundations poured during this time frame contained a mineral, pyrrhotite, which can cause cracking when it reacts with oxygen and water. It is estimated nearly 20,000 foundations poured contain the mineral.

The problem many policyholders are encountering is the collapse provision in their insurance policies. Typical policy language defines collapse as “an abrupt falling down or caving in of a building or any part of a building”; contrasted with language in the same policy: “a building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.” These apparently conflicting definitions of collapse arise from the conflicting meaning of the term “collapse” as it has evolved in court cases from the various states. The traditional view defined collapse as a falling down or caving in, and the liberal view allowed for a substantial impairment of structural integrity without an actual collapse. In addition to this, some homeowners are burdened by a “sudden” clause, where the collapse must be sudden to be covered, and the deterioration of a foundation occurs over time.

Connecticut has requested that insurance companies work with their insureds in good faith, and requested they join Connecticut’s “Crumbling Concrete Assistance Program,”—a relief fund for homeowners. If you are a Connecticut policyholder dealing with a foundation issue, Connecticut recently passed a law sealing complaints filed with Connecticut’s Department of Consumer Protection, and other state agencies, to protect homeowners worried filing such a complaint might harm any subsequent claim with the insurance company.