Homeowners Insurance and Building Collapses

The idea of a residential building collapsing is scary. When the condominium building in Surfside collapsed, it was a major disaster. Property insurance is or was the furthest thing from anyone's thinking. However, the collapse is an excellent warning to everyone about how and whether home insurance plans cover such structural collapses.

Bear in mind that not all collapses are catastrophic or deadly. This signifies that your unit or structure may risk collapse or imminent collapse. Additionally, you must establish whether or not you have homeowner's insurance coverage.

Which Type of Policy?

The first thing to check is if your homeowners' policy covers listed perils.

A named-peril policy will only cover damages specified in the policy. Often, the term "collapse" is used. It typically encompasses caving and collapsing and typically covers you even if your unit or portion of the structure does not collapse. Still, you cannot remain there due to a nearby collapse or imminent threat of collapse.

What Was the Cause of the Collapse?

However, as you might think, insurers will seize every opportunity to deny claims. Frequently, an insurance company will inquire about the reason for the collapse to determine whether an insured cause caused it.

Typically, when one of the following causes collapse, it will be covered:

• Any component of the building that was not visible or was not known to the building or unit owner
• Excessive weight on or within the structure
• Rain accumulation on a building's roof

Using substandard construction or substandard materials, but only during remodeling or renovating. This would not apply to a case in which a structure was constructed a certain number of years ago and then gradually deteriorated due to the initial construction's defects.

Often, issues such as earth movement—sinkholes or natural ground shifting—are overlooked.

Knowledge Is Valuable

Knowledge is critical; frequently, homeowners insurance will cover only collapses caused by something you did not know or could not have known.

As a unit owner, this presents an interesting legal quandary. On the one hand, you would know a condition that the condominium association or board of directors informed you about, disqualifying you from coverage. On the other hand, as an individual unit owner, you may be powerless to remedy the situation on your own, even if you were aware.

How Much Coverage Do You Have?

Even if you have coverage, the next question is how much coverage you have. Do you have insurance that will cover the cost of relocating while your condominium is uninhabitable? Do you have insurance on the contents of your unit? These are all factors to consider when purchasing a home's insurance coverage.